Stability analysis of the model for different tax rates. For a given interest rate r<sub>M</sub>, there exists a minimum consumption out of wealth α<sub>2</sub> for which the model is stable. An increase in the tax rate θ reduces this threshold. If consumption out of wealth is smaller than interest income after taxes (as indicated by the red dashed lines), the fixed point will definitely be unstable, as inflows to households are always bigger than outflows for α<sub>1</sub> &lt; 1.
Matthew Berg, Brian Hartley, Oliver Richters
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Matthew Berg, Brian Hartley, Oliver Richters: <i>A Stock-Flow Consistent Input-Output Model with Applications to Energy Price Shocks, Interest Rates, and Heat Emissions.</i> In: New Journal of Physics, Vol. 17, no. 1, January 2015, Art. 015011, <a href="//doi.org/10.1088/1367-2630/17/1/015011" class="extiw" title="doi:10.1088/1367-2630/17/1/015011">DOI:10.1088/1367-2630/17/1/015011</a>. <a rel="nofollow" class="external text" href="https://iopscience.iop.org/1367-2630/17/1/015011/downloadHRFigure/figure/njp506747f2">Image File</a>. Article published under terms of the Creative Commons Attribution 3.0 licence.