An Enhanced IS-LM Business Cycle Model for Increasing Income in a Dynamic Economy
Arista Fitri Diana
(1*) , Shafira Meiria Rahmasari
(2) , Dhimas Mahardika
(3)
(1) Institut Teknologi Statistika dan Bisnis Muhammadiyah Semarang
(2) STAI Al-Bahjah Cirebon
(3) Universitas Nasional Karangturi
(*) Corresponding Author
Abstract
This paper introduces an enhanced IS-LM business cycle model by integrating control parameters using the Pontiyagin Maximum Principle Method, aiming to maximize income within economic cycles. It develops a dynamic model incorporating import and consumption rates as controls, showcasing their impact on economic variables through simulations and analytical methodologies. The results exhibit a significant increase in income by up to 10% through the reduction of interest rates and capital stock. The efficiency of the proposed controls is visually demonstrated, providing a robust validation of the methodology used, aligning with prior research, and offering substantial insights into dynamic business cycle modelling for economic analysis and policy-making.
Keywords
Chaos theory and intelligent control systems
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DOI:
https://doi.org/10.26714/jichi.v4i2.13201
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____________________________________________________________________________ Journal of Intelligent Computing and Health Informatics (JICHI) ISSN 2715-6923 (print) | 2721-9186 (online) Organized by Department of Informatics Faculty of Engineering Universitas Muhammadiyah Semarang
W : https://jurnal.unimus.ac.id/index.php/ICHI E : [email protected] , [email protected]
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