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

  • Giovanni Dosi
  • Mauro Sodini
  • Maria Enrica Virgillito

The main task of this work is to develope 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's model (1967), rephrased in discrete time and extended by means of a coupled dynamics structure. The model entails 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 harmonic oscillations, or chaotic motions. These two different dynamical paths accounting for the behaviour of the system are influenced by its (predominantly) profit-led or wage-led structures.

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Paper provided by Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy in its series LEM Papers Series with number 2013/24.

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Date of creation: 12 2013
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Handle: RePEc:ssa:lemwps:2013/24
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  1. S. Sordi, 1999. "Economic models and the relevance of “chaotic regions”:An application to Goodwin's growth cycle model," Annals of Operations Research, Springer, vol. 89(0), pages 3-19, January.
  2. Bhaduri, Amit & Marglin, Stephen, 1990. "Unemployment and the Real Wage: The Economic Basis for Contesting Political Ideologies," Cambridge Journal of Economics, Oxford University Press, vol. 14(4), pages 375-93, December.
  3. Bischi, Gian-Italo & Stefanini, Luciano & Gardini, Laura, 1998. "Synchronization, intermittency and critical curves in a duopoly game," Mathematics and Computers in Simulation (MATCOM), Elsevier, vol. 44(6), pages 559-585.
  4. Yoshida, Hiroyuki & Asada, Toichiro, 2007. "Dynamic analysis of policy lag in a Keynes-Goodwin model: Stability, instability, cycles and chaos," Journal of Economic Behavior & Organization, Elsevier, vol. 62(3), pages 441-469, March.
  5. Giovanni Dosi & Giorgio Fagiolo & Andrea Roventini, 2008. "Schumpeter Meeting Keynes: A Policy-Friendly Model of Endogenous Growth and Business Cycles," Working Papers 50/2008, University of Verona, Department of Economics.
  6. Frédéric Lordon, 1995. "Cycles et chaos dans un modèle hétérodoxe de croissance endogène," Revue Économique, Programme National Persée, vol. 46(6), pages 1405-1432.
  7. Paul A. Samuelson, 1939. "A Synthesis of the Principle of Acceleration and the Multiplier," Journal of Political Economy, University of Chicago Press, vol. 47, pages 786.
  8. J. Barkley Rosser, 1999. "On the Complexities of Complex Economic Dynamics," Journal of Economic Perspectives, American Economic Association, vol. 13(4), pages 169-192, Fall.
  9. Louca, Francisco, 2001. "Intriguing Pendula: Founding Metaphors in the Analysis of Economic Fluctuations," Cambridge Journal of Economics, Oxford University Press, vol. 25(1), pages 25-55, January.
  10. Giovanni Dosi & Christopher Freeman & Richard Nelson & Gerarld Silverberg & Luc Soete (ed.), 1988. "Technical Change and Economic Theory," LEM Book Series, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy, number dosietal-1988, August.
  11. Fanti, Luciano & Gori, Luca & Sodini, Mauro, 2012. "Nonlinear dynamics in a Cournot duopoly with relative profit delegation," MPRA Paper 37834, University Library of Munich, Germany.
  12. M. Kalecki, 1949. "A New Approach to the Problem of Business Cycles," Review of Economic Studies, Oxford University Press, vol. 16(2), pages 57-64.
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