Feedback models and stability analysis of three economic paradigms

TL;DR

This paper applies control theory feedback models to analyze the stability of three key economic paradigms, providing analytical solutions and insights into economic policy implications.

Contribution

It introduces a novel application of control theory to economic models, offering analytical solutions and stability analysis for three important paradigms.

Findings

Analytical solutions for each economic paradigm.

Insights into stability conditions of economic policies.

Guidelines for economic policy design based on feedback stability.

Abstract

In this paper, simple mathematical models from Control Theory are applied to three very important economic paradigms, namely (a) minimum wages in self-regulating markets, (b) market-versus-true values and currency rates, and (c) government spending and taxation levels. Analytical solutions are provided in all three paradigms and some useful conclusions are drawn in terms of variable analysis. This short study can be used as an example of how feedback models and stability analysis can be applied as a guideline of 'proofs' in the context of economic policies.