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Profit-driven and demand-driven investment growth and fluctuations in different accumulation regimes

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  • Giovanni Dosi
  • Mauro Sodini
  • Maria Virgillito

Abstract

The main task of this work is to develop a model able to encompass, at the same time, Keynesian, demand-driven, and Marxian, profit-driven, determinants of fluctuations. Our starting point is the Goodwin model ( 1967 ), rephrased in discrete time and extended by means of a full coupled dynamics structure. The model adds the combined interaction of a demand effect, which resembles a rudimentary first approximation to an accelerator, and of a hysteresis effect in wage formation in turn affecting investments. Our model yields “business cycle” movements either by means of persistent oscillations, or chaotic motions. These two different dynamical paths accounting for the behaviour of the system are influenced by its (predominantly) profit-led or demand-led structures. Copyright Springer-Verlag Berlin Heidelberg 2015

Suggested Citation

  • Giovanni Dosi & Mauro Sodini & Maria Virgillito, 2015. "Profit-driven and demand-driven investment growth and fluctuations in different accumulation regimes," Journal of Evolutionary Economics, Springer, vol. 25(4), pages 707-728, September.
    • Handle: RePEc:spr:joevec:v:25:y:2015:i:4:p:707-728
    DOI: 10.1007/s00191-015-0406-8
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    1. Dosi, G. & Pereira, M.C. & Roventini, A. & Virgillito, M.E., 2017. "When more flexibility yields more fragility: The microfoundations of Keynesian aggregate unemployment," Journal of Economic Dynamics and Control, Elsevier, vol. 81(C), pages 162-186.
    2. Andrea Borsato, 2022. "An agent-based model for Secular Stagnation in the USA: theory and empirical evidence," Journal of Evolutionary Economics, Springer, vol. 32(4), pages 1345-1389, September.
    3. Giovanni Dosi & Andrea Roventini, 2019. "More is different ... and complex! the case for agent-based macroeconomics," Journal of Evolutionary Economics, Springer, vol. 29(1), pages 1-37, March.
    4. Antonelli, Cristiano & Feder, Christophe, 2020. "The new direction of technological change in the global economy," Structural Change and Economic Dynamics, Elsevier, vol. 52(C), pages 1-12.
    5. Danilo Spinola, 2021. "The La Marca model revisited: Structuralist goodwin cycles with evolutionary supply side and balance of payments constraints," Metroeconomica, Wiley Blackwell, vol. 72(1), pages 189-212, February.
    6. Rinaldo Evangelista, 2018. "Technology and Economic Development: The Schumpeterian Legacy," Review of Radical Political Economics, Union for Radical Political Economics, vol. 50(1), pages 136-153, March.
    7. Spinola, Danilo, 2020. "Uneven development and the balance of payments constrained model: Terms of trade, economic cycles, and productivity catching-up," Structural Change and Economic Dynamics, Elsevier, vol. 54(C), pages 220-232.
    8. Lucrezia Fanti, 2021. "‘Kaldor Facts’ and the decline of Wage Share: An agent based-stock flow consistent model of induced technical change along Classical and Keynesian lines," Journal of Evolutionary Economics, Springer, vol. 31(2), pages 379-415, April.
    9. Lucrezia Fanti, 2018. "An AB-SFC Model of Induced Technical Change along Classical and Keynesian Lines," Working Papers 3/18, Sapienza University of Rome, DISS.
    10. Giovanni Dosi & Davide Usula & Maria Enrica Virgillito, 2023. "Increasing returns and labour markets in a predator-prey model," LEM Papers Series 2023/21, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    11. Daniele Tavani & Luca Zamparelli, 2020. "Growth, income distribution, and the ‘entrepreneurial state’," Journal of Evolutionary Economics, Springer, vol. 30(1), pages 117-141, January.
    12. Betül Mutlugün, 2022. "Endogenous income distribution and aggregate demand: Empirical evidence from heterogeneous panel structural vector autoregression," Metroeconomica, Wiley Blackwell, vol. 73(2), pages 583-637, May.
    13. Marwil J. Dávila-Fernández, 2020. "Alternative approaches to technological change in a small open economy," Journal of Evolutionary Economics, Springer, vol. 30(2), pages 279-317, April.
    14. repec:hal:spmain:info:hdl:2441/9d007rc2q9huruni0kde2vr73 is not listed on IDEAS

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    More about this item

    Keywords

    Endogenous growth; Business cycles; Investment; Predator-prey dynamics; Aggregate demand; Accelerator; Complex systems; Non-linearity; Chaos theory; E32; E11; E12; E17;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • 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
    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications

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