Balance‐of‐payments‐constrained cyclical growth with distributive class conflicts and productivity dynamics

Abstract

This study builds a dynamic balance‐of‐payments‐constrained model that incorporates the endogenous determination of the economic growth rate, conflictive wage/price distribution and employment rate. The wages, commodity prices and employment rate are determined by the profit squeeze effect and labour‐saving technical change. The relative strength of these two effects generates different outcomes for the transitional dynamics and comparative statics analysis. Particularly, the model shows stability, instability and cyclical nature, the latter of which concurs with the evidence reported by previous empirical studies.

Uneven Development and the Balance of Payments Constrained Model: Terms of Trade, Economic Cycles, and Productivity Catching-up.

“…In an addition to the monotonic convergence of the Dutt model, our model reproduces damped cycles, with terms of trade and economic growth cyclically converging in the long-run. The addition of a productivity dynamics and a specific labor market structure contributes to the expansion of the Thirlwall-Goodwin tradition of Nishi (2019) and Dávila-Fernández & Sordi (2019) . In this research, we observe new types of transition dynamics under dynamic prices in the BPCM ( Dutt, 2002 ); offering an alternative to expand the cyclical discussion in the New Structuralist tradition of Cimoli & Porcile (2014) and Porcile & Yajima (2019) .…”

“…In the literature, Pugno (1998) was the first author to investigate the relationship between income distribution and external constraint. More recently, authors such as Nishi (2019) and Dávila-Fernández & Sordi (2019) made important contributions to the literature connecting the BPCM with the Goodwin model, in which cycles oscillate around the long-run equilibrium balance of payments constrained growth rate.…”

“…The Goodwin model was initially thought for a closed economy. To discuss it as an open economy, we consider it in the context of the balance of payments constrained model, as discussed by the recent contributions of Nishi (2019) and Dávila-Fernández & Sordi (2019) .…”

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

“…Pugno (1998) was a pioneer in this debate, even though his model is unable to generate permanent cyclical fluctuations. More recently, Dávila‐Fernández and Sordi (2019) and Nishi (2019) have succeeded to extend and empirically test Goodwin's growth cycle to an open economy framework in which the economy fluctuates around the balance of payments constrained equilibrium rate of growth (Dávila‐Fernández, 2020).…”

“…This model was later developed in a structuralist version by Barbosa‐Filho and Taylor (2006). The open economy version of the Goodwin model has been a matter recently brought back to the debate by Pugno (1998), Nishi (2019), Dávila‐Fernández and Sordi (2019) and Spinola (2020). La Marca (2010) gave a further contribution, combining the Structuralist Goodwin model with a stock‐flow framework by Foley and Taylor (2004).…”