Mathematical modeling of the investment multiplier mechanism
Subject The subject of the study is to explore the stages of interaction development between the investment multiplier and accelerator. Multiplier effects may have both positive and negative impact on the process of reducing the dependence of the Russian economy on the export of hydrocarbons. The investment multiplier effect not only triggers the economic growth, but also leads to inflation and resource scarcity. Objectives The study aims at building a mathematical model, which describes the structure of the process of multiplicative changes in the volume of demand and investments as a result of the initial investment impulse. Methods The simulation of the analyzed process is based on the time series analysis. Multiplicative process of changes in the volume of demand and investment is viewed as a recursive process, each stage of which repeats the development of the model as a whole. Results I have developed a mathematical model describing the dynamics of a multiplicative process through the description of its separate stages. The model describes not only each step of the analyzed process, but also the individual components of each stage. The article defines the criteria under which the analyzed process will be monotonically increasing, burst-promoting, fading. Conclusions and Relevance The findings may be useful in solving the problems of national and regional development, and in major investment project planning. The obtained model may help predict the magnitude of multiplier effects and changes in the volume of major macroeconomic indicators.