Qualitative dynamics and causality in a Keynesian model

Abstract

In this paper we present a formalism to describe economic dynamics in a qualitative way. This formalism is a modification of an existing algorithm for qualitative simulation as proposed by Kuipers. It is demonstrated that the framework of qualitative dynamics can clarify economic reasoning without using any quantative data. Especially causal arguments that sometimes mysteriously occur when economists implicitly mix static and dynamic models, can be understood in a formal way. Furthermore, we bring together the lines of thought recently established in the field of artificial intelligence and the results of qualitative economics that can be found in earlier papers. A simple Keynesian model serves as an example throughout this text.