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  • Abstract IS-LM Model

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    Arista Fitri
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    This document summarizes a study that analyzes the IS-LM business cycle model dynamically with control variables. The study develops a non-linear model using investment, saving, and money demand functions. It then performs local stability analysis using the Routh Hurwitz method and optimal control analysis using the Maximum Pontryagin Principle to determine how import control and public consumption can increase income in the model. The numerical results show that the optimal control strategy can increase revenue.

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    This document summarizes a study that analyzes the IS-LM business cycle model dynamically with control variables. The study develops a non-linear model using investment, saving, and money demand functions. It then performs local stability analysis using the Routh Hurwitz method and optimal control analysis using the Maximum Pontryagin Principle to determine how import control and public consumption can increase income in the model. The numerical results show that the optimal control strategy can increase revenue.

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    0 views1 page

    Abstract IS-LM Model

    Uploaded by

    Arista Fitri
    This document summarizes a study that analyzes the IS-LM business cycle model dynamically with control variables. The study develops a non-linear model using investment, saving, and money demand functions. It then performs local stability analysis using the Routh Hurwitz method and optimal control analysis using the Maximum Pontryagin Principle to determine how import control and public consumption can increase income in the model. The numerical results show that the optimal control strategy can increase revenue.

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    © All Rights Reserved
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    Dynamic Analysis of IS-LM Business Cycle Model with

    Control

    Arista Fitri Diana1*, Shafira Meiria Rahmasari2


    1
    Institut Teknologi Statistika dan Bisnis Muhammadiyah Semarang
    2
    Sekolah Tinggi Agama Islam Al-Bahjah Cirebon

    *
    Corresponding author email: aristafitridiana@gmail.com

    Abstract. The IS-LM business cycle model is a financial economics model that
    uses theory in economic and financial mathematics by applying a deterministic
    model that forms a dynamic system. The variables in the IS-LM model are
    income, capital stock, and interest rest. This article will discuss the non-linear
    function of the investment function, saving function, and money demand
    function by providing import control and the level of public consumption to
    increase income. Furthermore, local stability analysis was carried out with the
    Routh Hurwitz method. Meanwhile, to analyze the optimal control on the
    model using the Maximum Pontryagin Principle. The numerical results
    obtained state that the optimal control strategy given can increase revenue.

    Keywords: IS-LM business cycle model, dynamic model, equilibrium point,


    local stability analysis, optimal control

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