The Stability Properties of Goodwin’s Growth Cycle Model with a Variable Elasticity of Substitution Production Function

Nikolaos Rodousakis

Studies in Microeconomics, 2014, vol. 2, issue 2, 213-223

Abstract: This article investigates the stability properties of the well-known Goodwin’s growth cycle model, when a production function with variable elasticity of substitution is considered. It is found that the latter amounts to the introduction of a dampening effect; hence, the equilibrium becomes locally asymptotically stable. However, if we assume endogenous labour productivity growth, this is not the only possible solution; the model can exhibit converging or diverging oscillations as well as closed concentric trajectories depending on the assumed opposite effects of ‘elasticity of (factor) substitution’ and ‘endogenous labour productivity growth’.

Keywords: Endogenous labour productivity growth; Goodwin’s growth cycle models; structural stability; variable elasticity of substitution (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://journals.sagepub.com/doi/10.1177/2321022214545249 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:sae:miceco:v:2:y:2014:i:2:p:213-223

DOI: 10.1177/2321022214545249

Access Statistics for this article

More articles in Studies in Microeconomics
Bibliographic data for series maintained by SAGE Publications ().