Goodwin's Predator-Prey model is structurally unstable. In its pure form, the model has an equilibrium that is neither stable nor unstable. Ploeg showed that relaxing the hypothesis of fixed proportion technology would stabilize the equilibrium. On the other hand, Goodwin showed that the equilibrium becomes unstable when endogenous productivity growth is considered. This paper studies the consequences of considering both effects, and concludes that the stabilizing effect of a flexible technology is much stronger than the destabilizing effect of endogenizing labor productivity.
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Paper provided by NIPE - Universidade do Minho in its series NIPE Working Papers with number
5/2007.
Find related papers by JEL classification: E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical E20 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data) E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
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