Introduction

In this chapter we derive and investigate the 34D intensive (state variable) form of the applied structural model of disequilibrium growth we have introduced and discussed in its originally extensive form level in great detail in Chiarella and Flaschel (1999b) and in the preceding chapter. We will represent the resulting 34 dimensional dynamical system from various perspectives, providing compact intensive form representations of the real and the financial sector of this economy in tabular form and also in the form of a system of national accounts. We will then discuss to some extent the economic content of the resulting laws of motion from their intensive form perspective, thereby showing that the model can be understood from the outset on the intensive form level.

Presenting the system from these various perspectives serves the purpose of making the reader acquainted with the notation and the relationships that apply on the intensive form level of the model. We hope that this approach will increase the readability of the laws of motion for quantities (including rates of growth), for prices (including wages, asset prices and also expectations), financial asset accumulation and feedback fiscal and monetary policy rules to be presented and discussed in Section 6.3. Section 6.4 then calculates the (up to the determination of nominal variables) uniquely determined steady state solution of this dynamical system and briefly considers its comparative dynamic properties which are generally very simple in nature.