An Extended Goodwin Model with Endogenous Technical Change: Theory and Simulation for the US Economy (1960-2019)

John Cajas Guijarro

MPRA Paper from University Library of Munich, Germany

Abstract: This paper extends the two-dimensional Goodwin model of distributive cycles by incorporating endogenous technical change, inspired on some insights originally formulated by Marx. We introduce a three-dimensional dynamical system, expanding the model to include wage share, employment rate, and capital-output ratio as state variables. Theoretical analysis demonstrates an economically meaningful and locally stable equilibrium point, and the Hopf bifurcation theorem reveals the emergence of stable limit cycles as the mechanization-productivity elasticity surpasses a critical value. Econometric estimation of model parameters using ARDL bounds cointegration tests is performed for the US economy from 1965 to 2019. Simulations show damped oscillations, limit cycles, and unstable oscillations, contributing to the understanding of complex capitalist dynamics.

Keywords: Goodwin model; endogenous technical change; Hopf bifurcation; ARDL; numerical simulations (search for similar items in EconPapers)
JEL-codes: C61 E11 E32 O33 O41 (search for similar items in EconPapers)
Date: 2023-10-15
New Economics Papers: this item is included in nep-his, nep-hme, nep-mac and nep-pke
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