Symbolic Algebra Programming for Analyzing the Long Run Dynamics of Economic Models

Abstract

Economists have long used overlapping generations models to explore important empirical and theoretical issues in public nance, development, international trade, savings and monetary policy. Recently, some researchers have criticized the way these and other models characterize the long run tendency of the economy. If the equations which codify the assumptions in the models can display bizarre behavior, the models could give misleading forecasts of the behavior of the economy. By studying the mathematical equations which economists use to codify and apply these models, I am investigating the relationship between the empirically determined parameters and the corresponding long run properties of the models. This paper shows how symbolic algebra programs can facilitate the analysis of the dynamics of these non-linear equation systems. I have used the symbolic algebra capabilities of Mathematica to develop a collection of programs for analyzing the asymptotic behavior of economic models. These symbolic programming algorithms implement a set of algorithms orignally designed fo