The La Marca Model revisited: Structuralist Goodwin cycles with evolutionary supply side and balance of payments constraints

Danilo Spinola

No 2020-002, MERIT Working Papers from United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT)

Abstract: This research investigates the causes of endogenous volatility in Latin America by expanding the La Marca (2010) model. The expansion consists in study: (I) Price-neutrality, (II) stability of the external sector, and (III) fixed income distribution. We also add (IV) an evolutionary supply-side in which productivity is at the centre of the economic dynamic through international technology transfer and the Kaldor-Verdoorn effect. The results show that (1) Latin American parameter values increase the endogenous oscillatory adjustment. (2) In all cases the model converges. (3) The price-neutrality assumption and external sector stability depend on specific parameter values to show either a cyclical or a monotonic convergence pattern. (4) Fixed income distribution lead to a monotonic trajectory, reducing oscillations. (5) The inclusion of the productivity dynamics generates new sources of volatility in the relationship between productivity, capacity utilization, and net external assets.

Keywords: Economic Cycles; Structuralism; Macroeconomic Dynamics. (search for similar items in EconPapers)
JEL-codes: E32 F44 O11 O30 (search for similar items in EconPapers)
Date: 2020-01-14
New Economics Papers: this item is included in nep-mac and nep-pke
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Journal Article: The La Marca model revisited: Structuralist goodwin cycles with evolutionary supply side and balance of payments constraints (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:unm:unumer:2020002

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