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Viability and Corridor Stability in Keynesian Supply‐Driven Growth
Author(s) -
Flaschel Peter
Publication year - 2001
Publication title -
metroeconomica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.256
H-Index - 29
eISSN - 1467-999X
pISSN - 0026-1386
DOI - 10.1111/1467-999x.00104
Subject(s) - economics , degenerate energy levels , hopf bifurcation , dynamics (music) , steady state (chemistry) , stability (learning theory) , growth model , wage , new keynesian economics , distribution (mathematics) , extension (predicate logic) , keynesian economics , point (geometry) , econometrics , nonlinear system , mathematics , bifurcation , physics , labour economics , computer science , monetary policy , mathematical analysis , chemistry , geometry , quantum mechanics , machine learning , acoustics , programming language
In this paper we reconsider and generalize a two‐dimensional growth cycle model of Skott that is based on supply‐side adjustment mechanisms and a Kaldorian theory of income distribution. This model gives rise to degenerate Hopf bifurcations if behaviour (in terms of rates of growth) is linear close to the steady state. Furthermore full capacity limits lead to viable dynamics from the global point of view if the steady state is locally attracting and to corridor stability with persistent fluctuations when it is repelling. These findings can to some extent also be obtained for a three‐dimensional growth cycle extension of the Skott model, which includes real wage dynamics as in Rose's employment cycle, now turned into economically viable dynamics through appropriate non‐linearities in the assumed adjustment processes of output and prices in the case when the steady state is locally repelling.