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

Cajas Guijarro, John (2023): A Classical Marxian Two-Sector Endogenous Cycle Model: Integrating Marx, Dutt, and Goodwin.

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.

• Item Type: MPRA Paper
• Language: English
• Keywords: two-sector model; labor market dynamics; endogenous cycles; sensitivity of investment to profit rate differentials; long-run equilibrium
• Subjects: C - Mathematical and Quantitative Methods > C6 - Mathematical Methods ; Programming Models ; Mathematical and Simulation Modeling > C61 - Optimization Techniques ; Programming Models ; Dynamic Analysis; E - Macroeconomics and Monetary Economics > E1 - General Aggregative Models > E11 - Marxian ; Sraffian ; Kaleckian; E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E32 - Business Fluctuations ; Cycles; O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O41 - One, Two, and Multisector Growth Models

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