Abstract
This paper deals with the amalgamated basic IS-LM business cycle model with Kaldor’s growth model to form an augmented model. Pertaining to substantial evidence, IS-LM model in paradigm with a specific economic extension (Kaldor-Kalecki Business cycle model in our case) provides an adept explanation of a developing but strong economy like that of our country. Occurring in the equation of capital accumulation, the two time delays are a result of the assumption in the investment function being both income and capital stock dependent in past period and maturity period. Investigating a model combined with capital accumulation is both interesting and important. From economist point of view, production without capital is impossible to even imagine. Moreover capital accumulation is impeccable to large-scale production, specialisation and creation of employment opportunities. In our model ‘I’ the investment function, ‘S’ the savings function and ‘L’ the demand for money are depending linearly on their arguments. We adhere to a linear model, contrary to the popular belief of non- linear models being the undisputed style for modern economics. The model is first shown to be mathematically and economically poised. The local stability of boundary and interior equilibrium points has been investigated. Three cases arise, pertaining to two time delays. System dynamics exhibits mutation under the influence of time delays and may clinch or discharge its local stability when subjected to the latter. Hopf bifurcation occurs when the delay parameter crosses a critical value.
Highlights
The Indian economy is the world's seventh largest according to market exchange rates and has been a mixed economy post-independence
With the advent of time delay in investment in 1935 (Frisch and Holme, 1935) there has been ample of literature spanning the extended IS-LM model with time delays (Torre, 1977)
Relevance of IS-LM model in the context of Indian economy and Capital accumulation as a synonym for growth find a fair portion in the proposed discussion
Summary
The Indian economy is the world's seventh largest according to market exchange rates and has been a mixed economy post-independence. Very few papers have emulsified linear models with dual time delays in explaining economic phenomenon, which are nonlinear in nature. Relevance of IS-LM model in the context of Indian economy and Capital accumulation as a synonym for growth find a fair portion in the proposed discussion. 2. Economic Milieux 2.1 IS-LM Model and the Kaleidoscope of Indian Markets The Investment Saving – Liquidity Preference Money Supply model has been the epicentre of macroeconomic modelling since its introduction. Economic Milieux 2.1 IS-LM Model and the Kaleidoscope of Indian Markets The Investment Saving – Liquidity Preference Money Supply model has been the epicentre of macroeconomic modelling since its introduction It showcases the intersection of the IS curve (income-expenditure model)involving demand and the LM curve(money available for investing) involving supply.We dedictae a few lines here neutralizing the criticsm surrounding the model. The results advocate our stand on the model and its audacity to explain the macroeconomic cycles in the Indian subcontinent
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Free) 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
