Nonlinear complex dynamics and Keynesian rigidity: A short introduction

The topic of this paper is to show that the greater acceptance and intense use of complex nonlinear dynamics in macroeconomics makes sense only within the neoKeynesian tradition. An example is presented regarding the behavior of an open-economy two-sector growth model endowed with Keynesian rigidity. The Keynesian view that structural instability globally exists in the aggregate economy is put forward, and therefore the need arises for policy to alleviate this instability in the form of dampened fluctuations is presented as an alternative view for macroeconomic theorizing.