Munich Personal RePEc Archive

A non-linear post-Keynesian Goodwin-type endogenous model of the cycle for the USA

Konstantakis, Konstantinos N. and Michaelides, Panayotis G. and Mariolis, Theodore (2018): A non-linear post-Keynesian Goodwin-type endogenous model of the cycle for the USA.

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Abstract

Since its original formulation, Goodwin’s (1967) approach became a standard endogenous business cycles model. However, despite its elegant mathematical formulation, the empirical estimation of Goodwin-type models has not always ended up in success. The present paper uses the so-called Bhaduri-Marglin accumulation function in Goodwin’s original growth cycle model. Based on its derived equations of motion and dynamic properties, we econometrically estimate the proposed model for the case of the US economy in the time period 1960-2012, using structural breaks. The empirical estimation is very satisfactory and, in general terms, consistent with economic theory and the findings by other researchers on the US economy. The results of this work suggest that the proposed approach is an appropriate vehicle for expanding and improving traditional Goodwin-type models.

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