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

John Cajas Guijarro

MPRA Paper from University Library of Munich, Germany

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.

Keywords: two-sector model; labor market dynamics; endogenous cycles; sensitivity of investment to profit rate differentials; long-run equilibrium (search for similar items in EconPapers)
JEL-codes: C61 E11 E32 O41 (search for similar items in EconPapers)
Date: 2023-09-22
New Economics Papers: this item is included in nep-gro, nep-his, nep-hme, nep-mac and nep-pke
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