Goodwin cycles and the BoPC growth paradigm: A macrodynamic model of growth and fluctuations

Dávila‐Fernández, Marwil J.; Libânio, Gilberto

doi:10.1016/j.econ.2016.09.004

Cited by 7 publications

(4 citation statements)

References 43 publications

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“…3939This specification builds on earlier work by Garcimartín et al. (2016) and Dávila‐Fernández & Libânio (2016), among others; it also has strong similarities to the empirical model of Alonso & Garcimartín (1998–99). In contrast, Dosi et al.…”

mentioning

confidence: 75%

“…These models also link to several of the other strands of literature covered above, since they all make labor productivity endogenous, some incorporate relative price effects, and others feature structural differences between the global North and South. The newer Goodwin-Thirlwall syntheses draw upon several earlier sources, including Pugno (1998), Barbosa-Filho (2001), La Marca (2010), Dávila-Fernández & Libânio (2016), and Garcimartín et al (2016, among others. 38 Rather than trace all these roots, however, we will focus here on several leading exemplars of the most recent contributions.…”

Section: Distributive Cycles Uneven Development and The Adjustment Pr...mentioning

confidence: 99%

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New advances and controversies in the framework of balance‐of‐payments‐constrained growth

Blecker

2021

Journal of Economic Surveys

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This article surveys selected recent contributions and debates regarding fundamental aspects of the theory of balance-of-payments-constrained growth (BPCG). The survey focuses mainly on studies, from roughly the period since 2010, in four broad (and related) areas: whether and how relative prices and the real exchange rate affect export performance and long-run growth; the role of endogenous technological progress; the causes and consequences of structural change; and the dynamics of adjustment toward (or cycles around) a long-run growth equilibrium with a balance-of-payments constraint. The discussion also highlights the increasing incorporation of insights from other theoretical traditions (Kaleckian, Kaldorian, Schumpeterian, Goodwinian, and structuralist) into the BPCG framework. The survey suggests the need to clarify the underlying assumptions and policy implications of the BPCG model and to complement its focus on long-run growth rates with analyses of medium-run adjustments and level effects.

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confidence: 75%

Section: Distributive Cycles Uneven Development and The Adjustment Pr...mentioning

confidence: 99%

New advances and controversies in the framework of balance‐of‐payments‐constrained growth

Blecker

2021

Journal of Economic Surveys

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“…These three analytical pillars add new insights to previous findings on stability, instability and cycles in BOPC growth models. For instance, Garcimartin, Kvedaras, and Rivas (2016) and Dávila-Fernández and Libânio (2016) captured the business cycle as the difference in the short-run growth rates and the growth rate determined by the Thirlwall's law. The BOPC growth rate in their models is always stable and constant, in case of the Thirlwall's law.…”

Section: Nishimentioning

confidence: 99%

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

Nishi

2019

Metroeconomica

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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.

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“…There is a substantial literature addressing general principles as well as numerical models, including consideration of the implications of monetary flows, credit, financial assets and institutions [20][21][22][23][24][25], now flourishing under the name Post Keneysian stock-flow-consistent modeling [26][27][28][29][30][31][32][33][34][35][36][37][38][39][40][41][42][43]. Various extensions of the Goodwin and Kalecki models have been made that embody specific concepts, address a wide range of limitations of the original models, and compare with data [44][45][46][47][48][49][50][51][52][53][54][55][56][57][58][59]. Among these, of particular interest for comparing with the present work are those of Steve Keen [45] and Lance Taylor [52].…”

mentioning

confidence: 99%

Preliminary steps toward a universal economic dynamics for monetary and fiscal policy

Bar-Yam,

Langlois-Meurinne,

Kawakatsu

et al. 2017

Preprint

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We consider the relationship between economic activity and intervention, including monetary and fiscal policy, using a universal monetary and response dynamics framework. Central bank policies are designed for economic growth without excess inflation. However, unemployment, investment, consumption, and inflation are interlinked. Understanding dynamics is crucial to assessing the effects of policy, especially in the aftermath of the recent financial crisis. Here we lay out a program of research into monetary and economic dynamics and preliminary steps toward its execution. We use general principles of response theory to derive specific implications for policy. We find that the current approach, which considers the overall supply of money to the economy, is insufficient to effectively regulate economic growth. While it can achieve some degree of control, optimizing growth also requires a fiscal policy balancing monetary injection between two dominant loop flows, the consumption and wages loop, and investment and returns loop. The balance arises from a composite of government tax, entitlement, subsidy policies, corporate policies, as well as monetary policy. We further show that empirical evidence is consistent with a transition in 1980 between two regimes-from an oversupply to the consumption and wages loop, to an oversupply of the investment and returns loop. The imbalance is manifest in savings and borrowing by consumers and investors, and in inflation. The latter followed an increasing trend until 1980, and a decreasing one since then, resulting in a zero interest rate largely unrelated to the financial crisis. Three recessions and the financial crisis are part of this dynamic. Optimizing growth now requires shifting the balance. Our analysis supports advocates of greater income and / or government support for the poor who use a larger fraction of income for consumption. This promotes investment due to the growth in expenditures. Otherwise, investment has limited opportunities to gain returns above inflation so capital remains uninvested, and does not contribute to the growth of economic activity.

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Goodwin cycles and the BoPC growth paradigm: A macrodynamic model of growth and fluctuations

Cited by 7 publications

References 43 publications

New advances and controversies in the framework of balance‐of‐payments‐constrained growth

New advances and controversies in the framework of balance‐of‐payments‐constrained growth

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

Preliminary steps toward a universal economic dynamics for monetary and fiscal policy

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