A Macroeconomic Mathematical Model for the National Income of a Union of Countries with Interaction and Trade

Authors: Ioannis Dassios , Mel Devine
Journal of Economic Structures , 5:18 , December, 2016 , pp. 1-15

In this article, we assume a union of countries where each national economy interacts
with the others. We propose a new model where (a) delayed variables are incorporated
into the system of equations and (b) the interaction element is restricted into
the annual governmental expenditure that is determined according to the experience
of the total system and the trade relations of these countries (exports–imports).
In addition, we consider the equilibrium(s) of the model (a discrete-time system) and
study properties for stability, the appropriate control actions as well as the total system
design in order to obtain a stable situation. Finally, a practical application is also investigated
that provides further insight and better understanding as regards the system
design and produced business cycles.