Consumer and Corporate Debt in a 3D Macroeconomic Model
We build on the literature of consumer debt–income inequality nexus, by developing a post-Keynesian model of growth and income distribution that incorporates both consumer and corporate borrowing. Specifically, we examine a non-linear dynamic system of three differential equations of workers’ debt-t...
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MDPI AG
2025-03-01
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| author | Emilia G. Marsellou Stylianos Kotsios |
| author_facet | Emilia G. Marsellou Stylianos Kotsios |
| author_sort | Emilia G. Marsellou |
| collection | DOAJ |
| description | We build on the literature of consumer debt–income inequality nexus, by developing a post-Keynesian model of growth and income distribution that incorporates both consumer and corporate borrowing. Specifically, we examine a non-linear dynamic system of three differential equations of workers’ debt-to-capital ratio, corporate debt-to-capital ratio, and the accumulation rate. We conduct simulations to solve the system for the long-run equilibrium points and examine local stability using the Routh–Hurwitz conditions. Additionally, we conduct a comparative statics analysis and investigate the stability of the model using a measure of the maximum distance among the three equilibrium points. Our key findings suggest that although our model shares several quantitative and qualitative aspects with the 2 × 2 models, the inclusion of corporate debt alters the impact of parameter changes on macroeconomic stability. This incorporation increases the number of parameters that have differing effects on stability across various scenarios. The ratio of external-to-internal borrowing, along with the interest rate, is among the few parameters that consistently undermines macroeconomic stability across all scenarios. |
| format | Article |
| id | doaj-art-74017678e5bc41a8b4f041dabdbbbfc1 |
| institution | DOAJ |
| issn | 2227-7390 |
| language | English |
| publishDate | 2025-03-01 |
| publisher | MDPI AG |
| record_format | Article |
| series | Mathematics |
| spelling | doaj-art-74017678e5bc41a8b4f041dabdbbbfc12025-08-20T03:08:57ZengMDPI AGMathematics2227-73902025-03-01137105210.3390/math13071052Consumer and Corporate Debt in a 3D Macroeconomic ModelEmilia G. Marsellou0Stylianos Kotsios1Centre of Planning and Economic Research (KEPE), 10672 Athens, GreeceUnit of Mathematics and Computer Science, Department of Economics, National and Kapodistrian University of Athens, 10559 Athens, GreeceWe build on the literature of consumer debt–income inequality nexus, by developing a post-Keynesian model of growth and income distribution that incorporates both consumer and corporate borrowing. Specifically, we examine a non-linear dynamic system of three differential equations of workers’ debt-to-capital ratio, corporate debt-to-capital ratio, and the accumulation rate. We conduct simulations to solve the system for the long-run equilibrium points and examine local stability using the Routh–Hurwitz conditions. Additionally, we conduct a comparative statics analysis and investigate the stability of the model using a measure of the maximum distance among the three equilibrium points. Our key findings suggest that although our model shares several quantitative and qualitative aspects with the 2 × 2 models, the inclusion of corporate debt alters the impact of parameter changes on macroeconomic stability. This incorporation increases the number of parameters that have differing effects on stability across various scenarios. The ratio of external-to-internal borrowing, along with the interest rate, is among the few parameters that consistently undermines macroeconomic stability across all scenarios.https://www.mdpi.com/2227-7390/13/7/1052consumer debtcorporate debtinequalitylocal stabilitymacroeconomic stabilitysimulation |
| spellingShingle | Emilia G. Marsellou Stylianos Kotsios Consumer and Corporate Debt in a 3D Macroeconomic Model Mathematics consumer debt corporate debt inequality local stability macroeconomic stability simulation |
| title | Consumer and Corporate Debt in a 3D Macroeconomic Model |
| title_full | Consumer and Corporate Debt in a 3D Macroeconomic Model |
| title_fullStr | Consumer and Corporate Debt in a 3D Macroeconomic Model |
| title_full_unstemmed | Consumer and Corporate Debt in a 3D Macroeconomic Model |
| title_short | Consumer and Corporate Debt in a 3D Macroeconomic Model |
| title_sort | consumer and corporate debt in a 3d macroeconomic model |
| topic | consumer debt corporate debt inequality local stability macroeconomic stability simulation |
| url | https://www.mdpi.com/2227-7390/13/7/1052 |
| work_keys_str_mv | AT emiliagmarsellou consumerandcorporatedebtina3dmacroeconomicmodel AT stylianoskotsios consumerandcorporatedebtina3dmacroeconomicmodel |