Economic models and the relevance of “chaotic regions”:An application to Goodwin's growth cycle model

Serena Sordi

Annals of Operations Research, 1999, vol. 89, issue 0, 3-19

Abstract: In this paper, we argue that Pohjola's one‐dimensional, discrete‐time version of Goodwin'sgrowth cycle model is based on assumptions that conflict with the “symbiotic‐conflictual”spirit of the model. It is shown that when the assumption about the dynamical real wage ismodified, in contrast with Pohjola's opinion, the likelihood of chaotic solutions does notincrease. In particular, when a discrete‐time Phillips curve is considered, the model becomestwo‐dimensional, but admits chaotic solutions only for parameter values which are not withineconomically reasonable values. Copyright Kluwer Academic Publishers 1999

Date: 1999
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DOI: 10.1023/A:1018987909832

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