Building blocks of a heterodox business cycle theory

Robert Calvert Jump and Engelbert Stockhammer

No PKWP2201, Working Papers from Post Keynesian Economics Society (PKES)

Abstract: A key characteristic of heterodox theories of the business cycle is their focus on endogenous business cycle mechanisms. This paper provides an overview and comparison of four models in heterodox business cycle theory: multiplier-accelerator models, Goodwin models, Minskyan debt-cycle models, and momentum trader models. A representative model from each theory is formulated as a two-dimensional predator-prey system in continuous time, which allows us to identify the different stabilising and destabilising mechanisms. We argue that the theories are substantially competing, as they posit different mechanisms that explain cycles, but we also argue that these mechanisms are not mutually exclusive. We suggest that heterodox economists work towards a synthesis.

Keywords: Business cycles; Endogenous cycles; Crises (search for similar items in EconPapers)
JEL-codes: B41 B50 E32 (search for similar items in EconPapers)
Pages: 26
Date: 2022-01
New Economics Papers: this item is included in nep-cwa, nep-hme, nep-hpe, nep-mac and nep-pke
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Journal Article: Building blocks of a heterodox business cycle theory (2023)
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