On the Application of the Laplace Transform in the Study of Phillips-Type Stabilization Policy

Satoru Kageyama

Graduate School of Economics, Osaka University, Osaka, Japan.

DOI: 10.4236/tel.[phone]                

Abstract

This paper provides a reformulation of Phillips’s multiplier-accelerator model with stabilization policy in terms of the Laplace transform. Applying the Laplace transform, the differential equations of the economy are transformed into the algebraic ones on a complex variable. The transfer functions of economic variables are defined by these algebraic equations. With this representation, we show the effects of Phillips-type policy on equilibrium level and derive the necessary and sufficient condition for asymptotic stability.

Keywords

Stabilization Policy, Multiplier-Accelerator Policy, Transfer Function, Laplace Transform

Conflicts of Interest

The authors declare no conflicts of interest.

References

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