Chaos, granularity, and instability in economic systems of countries with emerging market economies: relationships between GDP growth rate and increasing internal inequality

Desogus, Marco and Casu, Elisa (2022): Chaos, granularity, and instability in economic systems of countries with emerging market economies: relationships between GDP growth rate and increasing internal inequality. Published in: Journal of International Business and Economics , Vol. 22, No. 4 (December 2022): pp. 5-25.

Abstract

Starting from empirical observations of macroeconomic data from emerging market economies recorded in the second decade of the 2000s, an economic analysis was conducted on these economies’ prerogatives and prospects, with special attention given to possible risks of systemic instability and the general soundness of their social and socio-economic structures. These assessments seem particularly relevant, not only for the countries in question, but because of their growing influence in determining international economic balance in the network of relations with developed countries at large. Indeed, alongside good performance trends in production growth, distribution of new wealth that has exacerbated inequalities can be discerned. Moreover, emerging countries’ economic policies often show a general accommodation to the sole objective of production growth, whilst neglecting to maintain equilibrium within the combined arrangement of all (other) macroeconomic variables. Hence, at first we investigated the constitutive dynamics of these phenomena, using an income diffusion model based on a Pareto probability distribution, then on rheology for the analysis of the peculiar new wealth flows distributed over these countries’ populations as well as any spontaneous redistribution effects induced by transactions among resident agents. At that point, applying the Dynamic New Keynesian model, we represented the system and studied solutions. Finally, we offer a proposal for constant government monitoring of each system, adopting control procedures capable of intervening – by way of economic and monetary policy instruments – where trends showed certain critical levels of instability in the economic system, which are observable from the trajectory diagrams.

• Item Type: MPRA Paper
• Language: English
• Keywords: Emerging Market Economies; Macroeconomic Dynamics; Monetary Policy Control; Wealth Distribution; Local Stabilization Systems
• Subjects: C - Mathematical and Quantitative Methods > C0 - General > C02 - Mathematical Methods; C - Mathematical and Quantitative Methods > C6 - Mathematical Methods ; Programming Models ; Mathematical and Simulation Modeling > C61 - Optimization Techniques ; Programming Models ; Dynamic Analysis; E - Macroeconomics and Monetary Economics > E0 - General > E01 - Measurement and Data on National Income and Product Accounts and Wealth ; Environmental Accounts; E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook > E63 - Comparative or Joint Analysis of Fiscal and Monetary Policy ; Stabilization ; Treasury Policy; O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O47 - Empirical Studies of Economic Growth ; Aggregate Productivity ; Cross-Country Output Convergence

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