Path dependence, distributive cycles and export capacity in a BoPC growth model

In a recent article, we extended Goodwin's (1967) model to study the interaction between distributive cycles and international trade for economies in which growth is balance-of-payments constrained (BoPC). Building on that set up, we investigate the implications of allowing exports to be a function of the capital stock. Using the existence part of the Hopf bifurcation theorem, we show that the resulting 3-dimensional system admits a limit cycle solution. We rely on numerical simulations to verify if fluctuations are persistent and bounded. Applying panel cointegration techniques, we also provide empirical evidence for a sample of 19 OECD countries between 1950-2014 that gives support to the formulation adopted for the exports function. Our main contribution lies in providing a simple base-line model to study distributive dynamics in open economies in line with recent developments in the BoPC growth literature.