Short-run inventory oscillations in the Eckalbar disequilibrium macro model (Q1823125)

This paper extends the Eckalbar model of inventory fluctuations to include a nonlinear adjustment function of production. In this model, there are two sectors (households and firms) and three goods (output, labor and money). The firms' desired stock of output is assumed to be a nonlinear function of expected sales. Inventory accumulation is equal to the excess of production over sales, which is determined by consumers' utility maximization. Sales expectations are assumed to adjust to the difference between expected and actual sales. Economic fluctuations are created endogenously rather than through the switches between control regions of the economic system. The main contribution of the paper is to show how the Hopf bifurcation theorem can be applied to establish the existence of limit cycles.