A Dynamical Model of Business-Cycle Asymmetries:Extending Goodwin
AbstractA rarely noted, economically unrealistic feature of Goodwins (1967; 1972) celebrated growth-cycle model is that its state variables, the wage share of output and the employment proportion, can exceed unity. We propose a novel extension of the two-variable dynamical system which ensures that its solutions remain within the economically feasible region, i.e. the unit square of the wage share employment proportion phase plane. In a further extension, we obtain a model which, besides possessing a richer economic interpretation than the original, is able to generate asymmetric solution cycles. We use numerical techniques to investigate the new models properties; in particular, we examine business-cycle deepness and steepness.
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Bibliographic InfoArticle provided by Economic Issues in its journal Economic Issues.
Volume (Year): 12 (2007)
Issue (Month): 1 (March)
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- Desai, Meghnad, 1973. "Growth cycles and inflation in a model of the class struggle," Journal of Economic Theory, Elsevier, vol. 6(6), pages 527-545, December.
- Sichel, Daniel E, 1989. "Are Business Cycles Asymmetric? A Correction," Journal of Political Economy, University of Chicago Press, vol. 97(5), pages 1255-60, October.
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Staff General Research Papers
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- McQueen, Grant & Thorley, Steven, 1993. "Asymmetric business cycle turning points," Journal of Monetary Economics, Elsevier, vol. 31(3), pages 341-362, June.
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