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DISTRIBUTIVE AND DEMAND CYCLES IN THE US ECONOMY—A STRUCTURALIST GOODWIN MODEL
Author(s) -
BarbosaFilho Nelson H.,
Taylor Lance
Publication year - 2006
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/j.1467-999x.2006.00250.x
Subject(s) - economics , distributive property , business cycle , profit (economics) , econometrics , keynesian economics , microeconomics , mathematics , pure mathematics
There are regular counterclockwise cycles involving capacity utilization u (horizontal axis) and the labor share ψ (vertical axis) in the US economy since 1929. As in Goodwin’s cyclical growth model, ψ can be interpreted as a Lotka–Volterra predator variable and u as prey. In a phase diagram, dynamics around the u̇ =0 schedule respond to effective demand that econometric estimation (1948–2002) shows to be profit‐led. Distributive dynamics around the =0 curve demonstrate a long‐term profit squeeze. Across cycles, the real wage and labor productivity grow at 0.57 per cent per quarter, holding the labor share broadly stable. Modeling the cycle in the ( u , ψ) plane provides a parsimonious description of demand and distributive dynamics, consistent with the macroeconomics embedded in the work of Kalecki, Steindl, Goodwin and many subsequent authors.