Constrained Response Dynamics in Economics, CRDE

This paper proposes Constrained Response Dynamics in Economics (CRDE) as a unified dynamic framework for analyzing diminishing policy effectiveness, structural stagnation, and nonlinear fragility in macroeconomic systems. Rather than centering on equilibrium deviations or insufficient demand, CRDE conceptualizes the macroeconomy as a system operating under endogenous capacity limits and state-space occupation. Within this framework, long-run structural load determines whether the system retains usable response capacity, while short-run expectations dispersion and frictions primarily affect adjustment speed and volatility intensity. By explicitly separating the macroeconomy into a structural layer, a process layer, and a stochastic layer, CRDE accounts—within a single representation—for stimulus ineffectiveness under high-debt environments, Japan-style long stagnation, cross-country heterogeneity in policy outcomes, and the emergence of crises during periods of apparent stability. The framework is comparative, scalable, and institution-agnostic, and is intended to serve as a general analytical language for macroeconomic structural-state analysis.