Profit-driven and demand-driven investment growth and fluctuations in different accumulation regimes

Giovanni Dosi, Mauro Sodini () and Maria Enrica Virgillito

Journal of Evolutionary Economics, 2015, vol. 25, issue 4, 707-728

Abstract: The main task of this work is to develop a model able to encompass, at the same time, Keynesian, demand-driven, and Marxian, profit-driven, determinants of fluctuations. Our starting point is the Goodwin model ( 1967 ), rephrased in discrete time and extended by means of a full coupled dynamics structure. The model adds the combined interaction of a demand effect, which resembles a rudimentary first approximation to an accelerator, and of a hysteresis effect in wage formation in turn affecting investments. Our model yields “business cycle” movements either by means of persistent oscillations, or chaotic motions. These two different dynamical paths accounting for the behaviour of the system are influenced by its (predominantly) profit-led or demand-led structures. Copyright Springer-Verlag Berlin Heidelberg 2015

Keywords: Endogenous growth; Business cycles; Investment; Predator-prey dynamics; Aggregate demand; Accelerator; Complex systems; Non-linearity; Chaos theory; E32; E11; E12; E17 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (19)

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Working Paper: Profit-driven and demand-driven investment growth and fluctuations in different accumulation regimes (2013)
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DOI: 10.1007/s00191-015-0406-8

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