Feedback dynamic control for exiting a debt-induced spiral in a deterministic Keen model

• Autores: Perez Avellaneda, Ivan, Rosales, Francisco, Duffaut Espinosa, Luis A.
• Formato: artículo
• Fecha de Publicación: 2024
• Institución: Universidad ESAN
• Repositorio: ESAN-Institucional
• Lenguaje: inglés
• OAI Identifier: oai:repositorio.esan.edu.pe:20.500.12640/4016
• Enlace del recurso: https://hdl.handle.net/20.500.12640/4016; https://doi.org/10.1371/journal.pone.0295859
• Nivel de acceso: acceso abierto
• Materia: Keen model; Debt spiral; Modelo Keen; Espiral de deuda; https://purl.org/pe-repo/ocde/ford#5.02.04

The Keen model is designed to represent an economy as a dynamic system governed by the interactions between private debt, wage share, and employment rate. When certain conditions are met, the model can lead to a debt spiral, which accurately mimics the impact of a financial crisis on an economy. This manuscript presents a recipe for breaking this spiral by expressing Keen’s model as an affine nonlinear system that can be modified through policy interventions. We begin by considering critical initial conditions that resemble a financial crisis to achieve this goal. We then locate a desired point within the system’s vector field that leads to a desirable equilibrium and design a path towards it. This path is later followed using one-step-ahead optimal control. We illustrate our approach by presenting simulated control scenarios.