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Economic growth cycles driven by investment delay

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  • Krawiec, Adam
  • Szydłowski, Marek

Abstract

We study the model of growth cycles in the framework of the Keynesian macroeconomic theory. The Kaldor–Kalecki growth model is the Kaldor business cycle model with two modifications: exponential growth introduced by Dana and Malgrange and Kaleckian investment time delay considered in this paper. This model has a form of a system of differential equations with time delay. The methods of dynamical system theory and bifurcation theory are used in the analysis of dynamics of growth cycles. Taking the time delay in investment as a bifurcation parameter we show the existence of a single Hopf bifurcation. We show that the time delay creates a limit cycle in a wider range of parameters than the model without the time delay. The time delay is the source of fluctuations which are described in a deterministic way. We carry out the numerical analysis of the model and find the limit cycle solution as well as we find that the higher the time delay parameter value the longer the period and the higher the amplitude of income and capital. We find that there is a distinguished value of growth rate parameter g=0.0147 for which the lowest value of investment time delay or the lowest value of speed of adjustment is required to obtain cyclic solutions.

Suggested Citation

  • Krawiec, Adam & Szydłowski, Marek, 2017. "Economic growth cycles driven by investment delay," Economic Modelling, Elsevier, vol. 67(C), pages 175-183.
    • Handle: RePEc:eee:ecmode:v:67:y:2017:i:c:p:175-183
    DOI: 10.1016/j.econmod.2016.11.014
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    References listed on IDEAS

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    1. Matsuyama, Kiminori, 2001. "Growing through Cycles in an Infinitely Lived Agent Economy," Journal of Economic Theory, Elsevier, vol. 100(2), pages 220-234, October.
    2. Asea, Patrick K. & Zak, Paul J., 1999. "Time-to-build and cycles," Journal of Economic Dynamics and Control, Elsevier, vol. 23(8), pages 1155-1175, August.
    3. Jess Benhabib & Kazuo Nishimura, 2012. "The Hopf Bifurcation and Existence and Stability of Closed Orbits in Multisector Models of Optimal Economic Growth," Springer Books, in: John Stachurski & Alain Venditti & Makoto Yano (ed.), Nonlinear Dynamics in Equilibrium Models, edition 127, chapter 0, pages 51-73, Springer.
    4. Kiminori Matsuyama, 1999. "Growing Through Cycles," Econometrica, Econometric Society, vol. 67(2), pages 335-348, March.
    5. A. Krawiec & M. Szydlowski, 1999. "The Kaldor‐Kalecki business cycle model," Annals of Operations Research, Springer, vol. 89(0), pages 89-100, January.
    6. Montgomery, Michael R., 1995. "'Time-to-build' completion patterns for nonresidential structures, 1961-1991," Economics Letters, Elsevier, vol. 48(2), pages 155-163, May.
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    Citations

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    Cited by:

    1. Hartwig, Johannes, 2022. "Semi-endogenous growth dynamics in a macroeconomic model with delays," Structural Change and Economic Dynamics, Elsevier, vol. 62(C), pages 538-551.
    2. Luca Guerrini & Adam Krawiec & Marek Szydlowski, 2020. "Bifurcations in economic growth model with distributed time delay transformed to ODE," Papers 2002.05016, arXiv.org.
    3. Deborah Lacitignola, 2021. "Handling Hysteresis in a Referral Marketing Campaign with Self-Information. Hints from Epidemics," Mathematics, MDPI, vol. 9(6), pages 1-17, March.
    4. Qiyan Wu & Jianquan Cheng, 2019. "A temporally cyclic growth model of urban spatial morphology in China: Evidence from Kunming Metropolis," Urban Studies, Urban Studies Journal Limited, vol. 56(8), pages 1533-1553, June.
    5. Yan, Tingjin & Chiu, Mei Choi & Wong, Hoi Ying, 2023. "Portfolio liquidation with delayed information," Economic Modelling, Elsevier, vol. 126(C).
    6. Cheng, Haihui & Meng, Xinzhu & Hayat, Tasawar & Hobiny, Aatef, 2023. "Multistability and bifurcation analysis for a three-strategy game system with public goods feedback and discrete delays," Chaos, Solitons & Fractals, Elsevier, vol. 175(P1).
    7. Liu, Donghui & Gao, Xiangyun & An, Haizhong & Jia, Nanfei & Wang, Anjian, 2024. "Exploring market instability of global lithium resources based on chaotic dynamics analysis," Resources Policy, Elsevier, vol. 88(C).

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    More about this item

    Keywords

    Growth cycles; Keynesian model; Delay differential equations;
    All these keywords.

    JEL classification:

    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • O49 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Other

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