Donald A. R. George

A circular economy model of economic growth

The main purpose of this paper is to present a theoretical model incorporating the concept of circular economic activities. We construct a circular economy model with two types of economic resources, namely, a polluting input and a recyclable input. Overall, our results indicate that the factors affecting economic growth include the marginal product of the recyclable input, the recycling ratio, the cost of using the environmentally polluting input and the level of pollution arising from the employment of the polluting input. Our analysis also shows that, contrary to the Environmental Kuznets Curve (EKC), environmental quality cannot be maintained or improved via economic growth. Instead, the improvement in environmental quality, as measured by a reduction in pollution, can only be achieved by an increase in the environmental self-renewal rate or the recycling ratio. A closed circular economy model is presented.Environmental quality cannot be maintained or improved via economic growth.The improvement in environmental quality can be achieved by an increase in the recycling ratio.

Self-Management and Ideology

The paper discusses the ideological basis of self-management. It considers whether self-management, as an economic system, is consistent with ideologies of Marxism, Anarchism, and Democracy. It goes on to consider the political question as to which groups are likely to oppose and which to support the introduction of self-management into a modern society.

Non-linear noise reduction and detecting chaos: some evidence from the S&P composite price index

Academic and applied researchers in economics have, in the last 10 years, become increasingly interested in the topic of chaotic dynamics. In this paper we undertake non-linear dynamical analysis of one representative time series taken from financial markets, namely the Standard and Poors (S&P) Composite Price Index. The data is based upon (adjusted) daily data from 1928 to 1987 comprising 16 127 observations. The results in the paper, based on the Grassberger–Procaccia (GP) correlation dimension measurement in conjunction with non-linear noise filtering and the surrogate technique, show strong evidence of chaos in one of these series, the S&P 500. The analysis shows that the accuracy of results improves with the increase in the number of recording points and the length of the time series, 5000 data points being sufficient to identify deterministic dynamics.

Structural stability and model design

Abstract The paper introduces the concept of structural stability and proposes that it should be considered a necessary property of scientifically valid models. Formalization of the concept is considered in both linear and non-linear models. A strong preference in favour of the wider use of non-linear models is supported by consideration of the dangers of linearization in dynamic models. The importance of structural stability is demonstrated with reference to dynamic rational expectations models which exhibit the saddle-point property. In such cases convergence to equilibrium is shown to be a structurally unstable property which can be forced by restrictive auxillary assumptions, which are highlighted.

Economics on the edge of chaos: Some pitfalls of linearizing complex systems

We discuss some issues and challenges facing economic modellers when confronted with data generated within a non-linear world. The pitfalls associated with the linearisation of inherently non-linear models are raised and the concept of robustness defined and proposed as a necessary property of scientifically valid models. The existence of chaos in economic time series is discussed and an example, using financial data, presented.

Economic Growth in Transition

This paper sets the contributions to this issue in the context of a large and rapidly growing literature. It argues, on theoretical and empirical grounds, that future research should focus on transitional growth dynamics. Copyright Blackwell Publishing Ltd, 2003.

Linear Saddlepoint Dynamics 'on their Head'. The Scientific Content of the New Orthodoxy in Macrodynamics

Abstract The paper proposes a particular property, robustness, which should be considered a necessary feature of scientifically valid models in economics. The scientific status of the New Orthodoxy in macroeconomics is then examined in the light of this property. It is shown that, in New Orthodoxy macrodynamics, the rational expectations hypothesis (REH), has to be augmented with ancillary hypotheses in order to achieve robustness. These hypotheses are far stronger and less plausible than the REH itself. The article concludes that most of the New Orthodoxy macrodynamics can be rejected on methodological grounds alone.

Money and inflation in a nonlinear model

A nonlinear model of inflation and growth, with a fixed rate of money growth, is developed and its global dynamics analysed. These are compared with the local, linearised dynamics of the model. It is shown that the global dynamics of the model plausibly predict hyperinflationary bubbles, which are not present in the linearised version. Numerical simulations of the model are presented.

Robustness and Local Linearisation in Economic Models

This paper discusses the importance of nonlinear dynamics from a theoretical and an empirical point of view. It stresses the need for global as opposed to local analysis and develops the important concept of robustness. Using this concept, the paper argues that much modern macroeconomics can be dismissed on methodological grounds alone. The paper also deals with the empirics of hyperinflation and with the detection of chaos in financial markets. Copyright 1999 by Blackwell Publishers Ltd

Self-Management, Anarchism and Democracy

Economic ideas do not exist in a political and ideological vacuum and it is therefore important to consider how the idea of self-management is related to various broader ideologies and to ask which ideologies, if any, provide a basis from which self-management as an economic system can rationally be supported. This leads one naturally to analyse the relationship between economic self-management and the wider political environment. In particular it is of interest to ask which interest groups are likely to support self-management and which to oppose it. This, in turn, leads to an analysis of how self-management might be promoted in existing societies. These are the issues dealt with in this chapter.