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Uncertainty and Contradiction: An Essay on the Business Cycle

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  • Michalis Nikiforos

Abstract

This paper presents a discussion of the forces at play behind the economic fluctuations in the medium run and their relation with the short-run macroeconomic equilibrium. The business cycle is the result of two separate phenomena. On the one hand, there is the instability caused by the discrepancy between expected and realized outcomes. On the other hand, this instability is contained by the inherent contradictions of capitalism; the upswing carries within it "the seeds of its own destruction." The same happens with the downswing. The paper provides a formal exposition of these insights, a discussion of how the formulation of this mechanism resembles the simple harmonic motion of classical mechanics, and an empirical evaluation.

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Bibliographic Info

Paper provided by Levy Economics Institute in its series Economics Working Paper Archive with number wp_770.

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Date of creation: Jul 2013
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Handle: RePEc:lev:wrkpap:wp_770

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Keywords: Cycles; Harrod; Oscillations; Distribution;

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  1. Bowles, Samuel & Boyer, Robert, 1988. "Labor Discipline and Aggregate Demand: A Macroeconomic Model," American Economic Review, American Economic Association, vol. 78(2), pages 395-400, May.
  2. Foley, Duncan K., 2003. "Endogenous technical change with externalities in a classical growth model," Journal of Economic Behavior & Organization, Elsevier, vol. 52(2), pages 167-189, October.
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  5. Taylor, Lance, 1990. "Real and Money Wages, Output and Inflation in the Semi-industrialized World," Economica, London School of Economics and Political Science, vol. 57(227), pages 329-53, August.
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  8. Peter Skott, 2008. "Growth, instability and cycles: Harrodian and Kaleckian models of accumulation and income distribution," UMASS Amherst Economics Working Papers 2008-12, University of Massachusetts Amherst, Department of Economics.
  9. Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-44, June.
  10. Lavoie, M., 1992. "The Kaleckian Model of Growth and Distribution and its Neo-Ricardian and Neo-Marxian Critiques," Working Papers 9201e, University of Ottawa, Department of Economics.
  11. Michalis Nikiforos & Duncan K. Foley, 2012. "Distribution And Capacity Utilization: Conceptual Issues And Empirical Evidence," Metroeconomica, Wiley Blackwell, vol. 63(1), pages 200-229, 02.
  12. Bowles, Samuel & Boyer, Robert, 1988. "Labor Discipline and Aggregate Demand: A Macroeconomic Model," Department of Economics, Working Paper Series qt8sb2623g, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
  13. Nelson H. Barbosa-Filho & Lance Taylor, 2006. "Distributive And Demand Cycles In The Us Economy-A Structuralist Goodwin Model," Metroeconomica, Wiley Blackwell, vol. 57(3), pages 389-411, 07.
  14. Davidson, Paul, 1972. "Money and the Real World," Economic Journal, Royal Economic Society, vol. 82(325), pages 101-15, March.
  15. Dutt, Amitava Krishna, 1984. "Stagnation, Income Distribution and Monopoly Power," Cambridge Journal of Economics, Oxford University Press, vol. 8(1), pages 25-40, March.
  16. Ryoo, Soon, 2010. "Long waves and short cycles in a model of endogenous financial fragility," Journal of Economic Behavior & Organization, Elsevier, vol. 74(3), pages 163-186, June.
  17. Christian Schoder, 2012. "Instability, stationary utilization and effective demand: A synthesis of Harrodian and Kaleckian growth theory," IMK Working Paper 104-2012, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
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