A Disequilibrium Growth Cycle Model with Differential Savings
University of Siena - DEPFID-Department of Economic Policy, Finance and Development
May 1, 2008
University of Siena DEPFID Working Paper No. 5/2008
This paper extends Goodwin’s growth cycle model by assuming both differential savings propensities and disequilibrium in the goods market. It is shown that both modifications entail an increase in the dimensionality of the dynamical system of the model. By applying the existence part of the Hopf bifurcation theorem, the possibility of persistent and bounded cyclical paths for the resulting 4-dimensional dynamical system is then established. With the help of numerical simulation some evidence is finally given that the limit cycle emerging from the Hopf bifurcation is stable.
Number of Pages in PDF File: 19
Keywords: growth cycle, differential savings, limit cycle, disequilibrium models
JEL Classification: C61, E10, E32working papers series
Date posted: November 26, 2010 ; Last revised: November 29, 2010
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