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Testing Goodwin: Growth Cycles in Ten OECD Countries

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  • Harvie, David

Abstract

Following Desai (1984), Goodwin's simple "predator-prey" growth cycle model of the economy (1967) is tested, using post-war data for ten OECD countries--Australia, Canada, Finland, France, Germany, Greece, Italy, Norway, the UK and the US. At a quantitative level, Goodwin's model is found not to be adequate: (i) estimated parameter values poorly predict the cycles' centres; and (ii) Goodwin's restrictive assumptions are not justified. However, at a qualitative level, the evidence presented here for the existence of Goodwin-type cycles is extremely encouraging, justifying both existing theoretical extensions of Goodwin's model and further empirical work in this area. Copyright 2000 by Oxford University Press.

Suggested Citation

  • Harvie, David, 2000. "Testing Goodwin: Growth Cycles in Ten OECD Countries," Cambridge Journal of Economics, Oxford University Press, vol. 24(3), pages 349-376, May.
  • Handle: RePEc:oup:cambje:v:24:y:2000:i:3:p:349-76
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    Citations

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    Cited by:

    1. Piero Manfredi & Luciano Fanti, 2006. "Demography In Macroeconomic Models: When Labour Supply Matters For Economic Cycles," Metroeconomica, Wiley Blackwell, vol. 57(4), pages 536-563, November.
    2. Luís Francisco Aguiar-Conraria, 2007. "A Note on the Stability Properties of Goodwin's Predator-Prey Model," NIPE Working Papers 5/2007, NIPE - Universidade do Minho.
    3. Steve Keen, 2015. "Post Keynesian Theories of Crisis," American Journal of Economics and Sociology, Wiley Blackwell, vol. 74(2), pages 298-324, March.
    4. repec:nea:journl:y:2017i:35:p:53-69 is not listed on IDEAS
    5. Veneziani, Roberto & Mohun, Simon, 2006. "Structural stability and Goodwin's growth cycle," Structural Change and Economic Dynamics, Elsevier, vol. 17(4), pages 437-451, December.
    6. Daniele Tavani, 2013. "Bargaining over productivity and wages when technical change is induced: implications for growth, distribution, and employment," Journal of Economics, Springer, vol. 109(3), pages 207-244, July.
    7. Tavani, Daniele & Vasudevan, Ramaa, 2014. "Capitalists, workers, and managers: Wage inequality and effective demand," Structural Change and Economic Dynamics, Elsevier, vol. 30(C), pages 120-131.
    8. Moura, N.J. & Ribeiro, Marcelo B., 2013. "Testing the Goodwin growth-cycle macroeconomic dynamics in Brazil," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 392(9), pages 2088-2103.
    9. Willis, Geoff, 2011. "Why money trickles up – wealth & income distributions," MPRA Paper 30851, University Library of Munich, Germany.
    10. Charpe, Matthieu & Flaschel, Peter & Hartmann, Florian & Malikane, Christopher, 2014. "Segmented Labor Markets and the Distributive Cycle: A Roadmap towards Inclusive Growth," MPRA Paper 62832, University Library of Munich, Germany.
    11. Mario García Molina & Eleonora Herrera, 2008. "Are There Goodwin Employment-Distribution Cycles? Theoretical and Empirical Evidence," DOCUMENTOS DE TRABAJO - ESCUELA DE ECONOMÍA 004685, UN - RCE - CID.
    12. Carlo V. Fiorio & Simon Mohun & Roberto Veneziani, 2013. "Social Democracy and Distributive Conflict in the UK, 1950-2010," Working Papers 705, Queen Mary University of London, School of Economics and Finance.
    13. Luís Francisco Aguiar, 2001. "The Stability Properties of Goodwin's Growth Cycle Model," NIPE Working Papers 10/2001, NIPE - Universidade do Minho.
    14. Steve Keen, 2013. "Predicting the ‘Global Financial Crisis’: Post-Keynesian Macroeconomics," The Economic Record, The Economic Society of Australia, vol. 89(285), pages 228-254, June.
    15. Mohun, Simon & Veneziani, Roberto, 2006. "Goodwin cycles and the U.S. economy, 1948-2004," MPRA Paper 30444, University Library of Munich, Germany.
    16. Bródy, András & Ábel, István, 2008. "A Goodwin-modell szimmetriái. Gazdasági paradigmák ellentéte és békülése
      [The symmetries of the Goodwin Model. Contradiction and reconciliation among economic paradigms]
      ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(4), pages 333-343.
    17. Tarassow, Artur, 2010. "The empirical relevance of Goodwin’s business cycle model for the US economy," MPRA Paper 21012, University Library of Munich, Germany.
    18. Keen, Steve, 2002. "The Dynamics of Keynesian Monetary Growth: Carl Chiarella and Peter Flaschel, Cambridge University Press, Cambridge, 2000, 434 pages, index, $90, ISBN 0521 643511," Journal of Economic Behavior & Organization, Elsevier, vol. 47(4), pages 466-468, April.
    19. Mariolis, Theodore & Tsoulfidis, Lefteris, 2010. "Measures of production price-labour value deviation and income distribution in actual economies: theory and empirical evidence," MPRA Paper 43718, University Library of Munich, Germany.
    20. Rodousakis, Nikolaos, 2010. "Testing Goodwin’s Growth Cycle Disaggregated Models: Evidence from the Input-Output Table of the Greek Economy for the Year 1988," MPRA Paper 24171, University Library of Munich, Germany.
    21. Manfredi, Piero & Fanti, Luciano, 2006. "The complex effects of demographic heterogeneity on the interaction between the economy and population," Structural Change and Economic Dynamics, Elsevier, vol. 17(2), pages 148-173, June.
    22. Desai, Meghnad & Henry, Brian & Mosley, Alexander & Pemberton, Malcolm, 2006. "A clarification of the Goodwin model of the growth cycle," Journal of Economic Dynamics and Control, Elsevier, vol. 30(12), pages 2661-2670, December.
    23. Nicolas Canry, 2005. "Wage-led Regime, Profit-led Regime and Cycles: a Model(French title for the publication: Régime wage-led, régime profit-led et cycles : un modèle)," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00149942, HAL.
    24. Matheus R. Grasselli & Aditya Maheshwari, 2018. "Testing a Goodwin model with general capital accumulation rate," Papers 1803.01536, arXiv.org.
    25. Matheus R. Grasselli & Aditya Maheshwari, 2018. "A comment on 'Testing Goodwin: growth cycles in ten OECD countries'," Papers 1803.01527, arXiv.org.

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