Feedback dynamic control for exiting a debt-induced spiral in a deterministic Keen model
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Date
2024-02-09
Journal Title
Journal ISSN
Volume Title
Publisher
Public Library of Science
Fecha de fin de embargo
Redes Sociales
Citación
Citación APAAbstract
The Keen model is designed to represent an economy as a dynamic system governed by the interactions between private debt, wage share, and employment rate. When certain conditions are met, the model can lead to a debt spiral, which accurately mimics the impact of a financial crisis on an economy. This manuscript presents a recipe for breaking this spiral by expressing Keen’s model as an affine nonlinear system that can be modified through policy interventions. We begin by considering critical initial conditions that resemble a financial crisis to achieve this goal. We then locate a desired point within the system’s vector field that leads to a desirable equilibrium and design a path towards it. This path is later followed using one-step-ahead optimal control. We illustrate our approach by presenting simulated control scenarios.
Description
Keywords
Keen model, Modelo Keen, Debt spiral, Espiral de deuda
Citation
Perez Avellaneda, I., Rosales, F., & Duffaut Espinosa, L. A. (2024). Feedback dynamic control for exiting a debt-induced spiral in a deterministic Keen model. PLoS ONE, 19(2), e0295859. https://doi.org/10.1371/journal.pone.0295859
