Feedback models and stability analysis of three economic paradigms

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.