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Endogenous fluctuations in demand and distribution: An empirical investigation

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  • Barrales-Ruiz, Jose
  • Arnim, Rudiger von

Abstract

This paper empirically investigates the possibility of self-sustained oscillations at business cycle frequency. The theoretical model considers aggregate economic activity and the functional income distribution in the spirit of Goodwin (1967). In the empirical investigation, we utilize four measures each of economic activity and the labor share for the US post-war macroeconomy. Using Schuster’s periodogram, we first show that these time series have an important frequency peak at about forty quarters. We therefore detrend them with wavelet methods. To allow for nonlinear dynamic interaction, we introduce a feedforward neural network (FNN). This method is first shown to correctly identify stability or a limit cycle in simulations of the theoretical model with reasonable noise and sample size. Estimation results provide some support for a limit cycle in the post-war US, but this evidence is not independent of detrending methods used.

Suggested Citation

  • Barrales-Ruiz, Jose & Arnim, Rudiger von, 2021. "Endogenous fluctuations in demand and distribution: An empirical investigation," Structural Change and Economic Dynamics, Elsevier, vol. 58(C), pages 204-220.
    • Handle: RePEc:eee:streco:v:58:y:2021:i:c:p:204-220
    DOI: 10.1016/j.strueco.2021.05.005
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    Cited by:

    1. Codrina Rada & Ansel Schiavone & Rudiger von Arnim, 2022. "Goodwin, Baumol & Lewis: How structural change can lead to inequality and stagnation," Metroeconomica, Wiley Blackwell, vol. 73(4), pages 1070-1093, November.
    2. Jose Barrales‐Ruiz & Rudiger von Arnim & Mikidadu Mohammed, 2023. "Income distribution and economic activity: A frequency domain causal exploration," Metroeconomica, Wiley Blackwell, vol. 74(2), pages 306-327, May.
    3. Codrina Rada, Ansel Schiavone, Rudiger von Arnim, 2021. "Goodwin, Baumol & Lewis: How structural change can lead to inequality and stagnation," Working Paper Series, Department of Economics, University of Utah 2021_04, University of Utah, Department of Economics.
    4. Codrina Rada, Marcio Santetti, Ansel Schiavone, Rudiger von Arnim, 2021. "Post-Keynesian vignettes on secular stagnation:From labor suppression to natural growth," Working Paper Series, Department of Economics, University of Utah 2021_05, University of Utah, Department of Economics.

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    More about this item

    Keywords

    Business cycles; Endogenous cycles; Goodwin cycles; Neural network;
    All these keywords.

    JEL classification:

    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • C45 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Neural Networks and Related Topics

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