Growth‒unemployment dynamics and distance to the long-run equilibrium in pure macroeconomic theory: a two-dimensional approach

In the theoretical part of the paper, we analyze the convergence of the trajectories of the growth rate and the unemployment rate toward global equilibrium in four distinct paradigms: Neoclassical analysis, Keynesian theory, the Schumpeterian framework, and Goodwin’s cyclical growth model. From the point of view of pure theory, the only case of global instability is that of Harrodian instability. From an empirical point of view, in 12 OECD countries, the distance between real economic performance and dynamic equilibrium follows a cyclical rhythm. No case of Harrodian instability seems to appear over the period studied. Neither is the cyclical dynamics of Goodwin's model validated. After a divergence from the dynamic equilibrium, the economies of all the countries studied converge again towards this equilibrium regardless of their differences in economic policy. For this reason, the optimistic conclusions of the neoclassical growth model seem empirically credible.