On Dynamics of a Three-Country Kaldorian Model of Business Cycles with Fixed Exchange Rates

In this paper, we consider a three-country Kaldorian nonlinear macrodynamic model of business cycles with fixed exchange rates. The term ‘Kaldorian’ means that our model is a three-country extension of Kaldor’s nonlinear business cycle model that is characterized by the dynamic interaction of the real income and the real capital stock. It is supposed that three countries are connected through international trade and international capital movement with imperfect capital mobility under fixed exchange rates. This paper is a sequel to our previous study of the two-country Kaldorian business cycle model under fixed exchange rates. We find by means of numerical simulations that the addition of one country to the previous analytical framework makes the dynamic behavior of the model much more complex compared with the two-country version.