Fluctuations in a dynamic, intermediate-run IS-LM model: Applications of the Poincare-Bendixon theorem
Abstract This paper proves the existence, uniqueness, and stability of closed orbits, for nonlinear intermediate-run macroeconomic models, using the Poincare-Bendixon theorem on planar dynamic systems. The models integrate a Kaldor-Goodwin-type nonlinear investment function and an IS-LM model augmented by a government budget constraint. The budget constraint allows for money and/or debt creation as alternative means of financing the treasury's operations.