Mathematical and historical dynamics of modern economy : an application to the Korean economy.

Summary It is essential to study nonlinear dynamics in mathematics and allows us to interpret such irregular and unpredictable phenomena as a result of deterministic processes, not just statistical errors or chances.System dynamics is a methodology as well as a method to implement nonlinear dynamic movements. Through these two methods, we capture the crisis in business cycles and test capital accumulation, and technical changes in the Macro Stock Management model and apply them to the South Korean economy. Various time series analysis tools are used to estimate the effects of investment on profit rates and the effects of wage inequality and consumer debt on domestic demand since the 2008 global financial crisis. The Structural Vector Auto-Regressive model imposes long-run or short-run restrictions on the VAR system, it uses to distinguish two variables with similar characteristics. Perron (1989) argues that traditional unit root tests such as the Augmented Dickey-Fuller test are likely to fail to detect stationarity or non-stationarity in data if they have structural breaks. Zivot and Andrews(1992) and Lumsdaine and Papell (1997) propose the unit root test model with endogenous structural breaks. The Gregory-Hansen test provides information about a structural break in a co-integration test. The ARDL (Auto Regressive Distributed Lags) model is used to capture long-term relationships between variables.