From Fisher to Keynes: A Mathematical Business Cycle Theory

This chapter examines Amoroso’s business cycle theory, which he considered one of the most important contributions to corporatist economic theory. Amoroso’s starting point was the theory of economic barometers, which he attempted to formalize. He developed business cycle modelshis mathematical theory of the cyclic movement of the economy by considering two sectors: the productive sector and the commercial one. There were two variables to be determined: the movement of the general price level and that of the production volume. In analytical terms, the equations were first-order differential equations with constant coefficients. Then, Amoroso worked to extend his model using equations from Keynes’s Treatise, but without much success because the resulting dynamic system was unstable. Eventually, in 1935, he arrived at a simplified macroeconomic model with three sectors: industrial, commercial, and banking. In this model, Amoroso obtained both a cyclical component and a long-term growth rate, consistent with the Italian tradition.