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Wage-led Regime, Profit-led Regime and Cycles: a Model(French title for the publication: Régime wage-led, régime profit-led et cycles : un modèle)

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  • Nicolas Canry

    (MATISSE - UMR 8595 - Modélisation Appliquée, Trajectoires Institutionnelles et Stratégies Socio-Économiques - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)

Abstract

We propose a dynamic model which deals with the impact of income distribution variations on growth. In that goal, we use two models : the classical Goodwin model (1967) and the Bhaduri-Marglin model (1990), which also focuses on the links between income distribution and growth, but in a Keynesian frame. We introduce Keynesian demand constraints within the Goodwin model and modify its investment function, which becomes non-linear. With these new hypotheses, we show that Goodwin cycles may either be maintained or disappear. If most trajectories oscillate around a classical equilibrium, the economy may also fall during a cycle into a Keynesian unemployment state. In that case, cycle dynamic is broken because wages are squeezed whereas the economy is in a wage-led regime. This model allows to capture some specific characteristics of the French economic situation that took place in the 1980s-1990s.

Suggested Citation

  • Nicolas Canry, 2005. "Wage-led Regime, Profit-led Regime and Cycles: a Model(French title for the publication: Régime wage-led, régime profit-led et cycles : un modèle)," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00149942, HAL.
    • Handle: RePEc:hal:cesptp:halshs-00149942
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00149942
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    References listed on IDEAS

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    1. Skott, Peter, 1989. "Effective Demand, Class Struggle and Cyclical Growth," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 30(1), pages 231-247, February.
    2. Harvie, David, 2000. "Testing Goodwin: Growth Cycles in Ten OECD Countries," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 24(3), pages 349-376, May.
    3. Joan Robinson, 1962. "A Model of Accumulation," Palgrave Macmillan Books, in: Essays in the Theory of Economic Growth, chapter 0, pages 22-87, Palgrave Macmillan.
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    5. Gérard Duménil & Dominique Lévy, 1999. "Being Keynesian in the Short Term and Classical in the Long Term: The Traverse to Classical Long‐Term Equilibrium," Manchester School, University of Manchester, vol. 67(6), pages 684-716, December.
    6. Bhaduri, Amit & Marglin, Stephen, 1990. "Unemployment and the Real Wage: The Economic Basis for Contesting Political Ideologies," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 14(4), pages 375-393, December.
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