Dynamic Macroeconomics with Multiple Regimes (opens in new tab)

Macroeconomic dynamics is typically modeled under the assumption that the economy evolves according to a single invariant law of motion. This paper shows that this assumption imposes a structural restriction. We develop Dynamic Macroeconomics with Multiple Regimes (DMR), a framework in which economic evolution is governed by multiple regime-specific propagation operators. As a result, trajectories arise from ordered compositions of heterogeneous...