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Demand-driven Goodwin cycles with Kaldorian and Kaleckian features

Author

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  • Rudiger von Arnim

    (University of Utah, USA)

  • Jose Barrales

    (University of Utah, USA and Universidad Católica de la Santísima Concepción, Chile)

Abstract

Goodwin's original endogenous growth cycle describes a supply-driven counter-clockwise movement in employment rate and labor share (Goodwin 1967). Such cycles are observed in (US) data. Similarly, counter-clockwise cycles exist between utilization rate and labor share, and utilization rate and employment rate. This paper presents a critical discussion of two demand-driven frameworks to explain these cycles, namely a Goodwin–Kaldor model and a Goodwin–Kalecki model. The two models share important features. The main difference lies in the approach to the determination of the distribution of income. We argue that the Goodwin–Kalecki model's 'profit squeeze' is the preferable approach.

Suggested Citation

  • Rudiger von Arnim & Jose Barrales, 2015. "Demand-driven Goodwin cycles with Kaldorian and Kaleckian features," Review of Keynesian Economics, Edward Elgar Publishing, vol. 3(3), pages 351-373, July.
    • Handle: RePEc:elg:rokejn:v:3:y:2015:i:3:p351-373
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    References listed on IDEAS

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    More about this item

    Keywords

    endogenous cycles and growth; profit squeeze; forced saving;
    All these keywords.

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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