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A Dynamical Model of Business-Cycle Asymmetries:Extending Goodwin

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  • D Harvie
  • M A Kelmanson
  • D G Knapp

Abstract

A 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.

Suggested Citation

  • D Harvie & M A Kelmanson & D G Knapp, 2007. "A Dynamical Model of Business-Cycle Asymmetries:Extending Goodwin," Economic Issues Journal Articles, Economic Issues, vol. 12(1), pages 53-92, March.
    • Handle: RePEc:eis:articl:107harvie
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    Cited by:

    1. Konstantakis, Konstantinos N. & Michaelides, Panayotis G. & Mariolis, Theodore, 2018. "A non-linear post-Keynesian Goodwin-type endogenous model of the cycle for the USA," MPRA Paper 90036, University Library of Munich, Germany.
    2. Alexander Lipton, 2016. "Modern Monetary Circuit Theory, Stability Of Interconnected Banking Network, And Balance Sheet Optimization For Individual Banks," International Journal of Theoretical and Applied Finance (IJTAF), World Scientific Publishing Co. Pte. Ltd., vol. 19(06), pages 1-57, September.
    3. Robert Calvert Jump & Engelbert Stockhammer, 2023. "Building blocks of a heterodox business cycle theory," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 46(2), pages 334-358, April.
    4. Alexander Lipton, 2015. "Modern Monetary Circuit Theory, Stability of Interconnected Banking Network, and Balance Sheet Optimization for Individual Banks," Papers 1510.07608, arXiv.org.
    5. Steve Keen, 2013. "Predicting the ‘Global Financial Crisis’: Post-Keynesian Macroeconomics," The Economic Record, The Economic Society of Australia, vol. 89(285), pages 228-254, June.

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