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A Classical Marxian Two-Sector Endogenous Cycle Model: Integrating Marx, Dutt, and Goodwin

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  • Cajas Guijarro, John

Abstract

This paper introduces a Classical Marxian Two-Sector Endogenous Cycle (CMTSEC) model, merging Dutt's (1988) two-sector model of Classical convergence with labor dynamics inspired by Goodwin (1967) and an endogenous labor supply inspired by Harris (1983). Empirical support fortifies these assumptions. Utilizing the Hopf bifurcation theorem and numerical simulations, we demonstrate the model's capacity to produce stable limit cycles encompassing wage share, employment rate, and sectoral capital distribution. Notably, sectoral profit rates exhibit cyclic fluctuations, prompting a reevaluation of long-run equilibrium. The model underscores the role of investment sensitivity to sectoral profit rate disparities in determining cycle stability. Hence, the CMTSEC model extends Goodwin’s (1967) endogenous cycle model, encapsulating the conflict between capital and labor while delving into the intricate dynamics of capitalist reproduction in a two-sector economy.

Suggested Citation

  • Cajas Guijarro, John, 2023. "A Classical Marxian Two-Sector Endogenous Cycle Model: Integrating Marx, Dutt, and Goodwin," MPRA Paper 118665, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:118665
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    References listed on IDEAS

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    1. Araujo, Ricardo Azevedo & Dávila-Fernández, Marwil J. & Moreira, Helmar Nunes, 2019. "Some new insights on the empirics of Goodwin's growth-cycle model," Structural Change and Economic Dynamics, Elsevier, vol. 51(C), pages 42-54.
    2. M. Hashem Pesaran & Yongcheol Shin & Richard J. Smith, 2001. "Bounds testing approaches to the analysis of level relationships," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(3), pages 289-326.
    3. Hiroki Murakami, 2018. "A two†sector Keynesian model of business cycles," Metroeconomica, Wiley Blackwell, vol. 69(2), pages 444-472, May.
    4. Cajas Guijarro, John & Vera, Leonardo, 2022. "The macrodynamics of an endogenous business cycle model of marxist inspiration," Structural Change and Economic Dynamics, Elsevier, vol. 62(C), pages 566-585.
    5. Harris, Donald J, 1983. "Accumulation of Capital and the Rate of Profit in Marxian Theory," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 7(3-4), pages 311-330, September.
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    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • E11 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Marxian; Sraffian; Kaleckian
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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