Monday, May 19, 2014

Daniele Tavani on Endogenous Business Cycles

Daniele's website is all revamped, and here is a new post, which is based on Goodwin 'Marxist' or Class Conflict business cycle. At some point I should post something about it, since this is one of the seminal profit-led  models, which I have criticized somewhere else. Notice also that Goodwin model suggests that the inflation barrier is at full employment.

As noted by Daniele, an important feature of the model is that cycles are endogenous, something uncommon in mainstream models of the cycle. In his words:
"The key point is that the model generates endogenous cycles, that is fluctuations that are independent of shocks (such as monetary policy, fiscal policy, or supply shocks)."
Kaldor (1940) and Goodwin (1951) non-linear multiplier-accelerator models would also fall into that category, by the way.

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