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Testing a Goodwin model with general capital accumulation rate

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  • Matheus R. Grasselli
  • Aditya Maheshwari

Abstract

We perform econometric tests on a modified Goodwin model where the capital accumulation rate is constant but not necessarily equal to one as in the original model (Goodwin, 1967). In addition to this modification, we find that addressing the methodological and reporting issues in Harvie (2000) leads to remarkably better results, with near perfect agreement between the estimates of equilibrium employment rates and the corresponding empirical averages, as well as significantly improved estimates of equilibrium wage shares. Despite its simplicity and obvious limitations, the performance of the modified Goodwin model implied by our results show that it can be used as a starting point for more sophisticated models for endogenous growth cycles.

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  • Matheus R. Grasselli & Aditya Maheshwari, 2018. "Testing a Goodwin model with general capital accumulation rate," Papers 1803.01536, arXiv.org.
    • Handle: RePEc:arx:papers:1803.01536
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    2. Dávila-Fernández, Marwil J. & Sordi, Serena, 2019. "Distributive cycles and endogenous technical change in a BoPC growth model," Economic Modelling, Elsevier, vol. 77(C), pages 216-233.
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    5. Dávila-Fernández, Marwil J. & Sordi, Serena, 2020. "Structural change in a growing open economy: Attitudes and institutions in Latin America and Asia," Economic Modelling, Elsevier, vol. 91(C), pages 358-385.
    6. Dávila-Fernández, Marwil J. & Sordi, Serena, 2019. "Path dependence, distributive cycles and export capacity in a BoPC growth model," Structural Change and Economic Dynamics, Elsevier, vol. 50(C), pages 258-272.

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