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Animal Spirits and the Goodwin Pattern

Author

Listed:
  • Mark Setterfield
  • George Wheaton

Abstract

The Goodwin pattern is an established stylized fact of capitalist macrodynamics. Existing models typically assume profit‐led real‐sector dynamics and a ‘reserve army’ mechanism in order to reproduce this pattern. We extend an animal‐spirits‐driven business cycle model, in which the demand regime is wage‐led, by adding a reserve army effect determining real wage dynamics. We construct an agent‐based simulation of the model, showing that we are able to reproduce the Goodwin pattern. Our results add to the literature suggesting that the Goodwin pattern can arise from various macrodynamic ensembles—including some that feature wage‐led real sectors.

Suggested Citation

  • Mark Setterfield & George Wheaton, 2026. "Animal Spirits and the Goodwin Pattern," Metroeconomica, Wiley Blackwell, vol. 77(1), pages 2-16, February.
    • Handle: RePEc:bla:metroe:v:77:y:2026:i:1:p:2-16
    DOI: 10.1111/meca.12506
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    Cited by:

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    2. Bella, Giovanni, 2025. "Emergence of chaotic dynamics in the Goodwin model with disequilibrium in the goods market," Structural Change and Economic Dynamics, Elsevier, vol. 73(C), pages 170-180.
    3. Mark Setterfield, 2025. "Distribution and Steady-State Growth Revisited," Working Papers 2502, New School for Social Research, Department of Economics, revised Jun 2025.

    More about this item

    JEL classification:

    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • E11 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Marxian; Sraffian; Kaleckian
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications

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