Abstract
Methodology for dynamical systems described by nonlinear stochastic differential equations is applied to economic systems, particularly the Phillips-Turnovsky model, generalizing the model further to nonlinear terms and stochastic coefficients and inputs, to determine expectations and correlation matrices for the variables which represent solution processes of a set of coupled equations. The theory is quite general and will apply if the model is changed to use different nonlinear forms, e.g., for taxes as a function of income, or different statistics for fluctuations (which need not be stationary or Gaussian or small), or, to include retarded effects.
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