Distributive and Demand Cycles in the Us Economya Structuralist Goodwin Model

23 Pages Posted: 10 Jul 2006

See all articles by N. H. Barbosa-Filho

N. H. Barbosa-Filho

Universidade Federal do Rio de Janeiro (UFRJ) - Institute of Economics

Lance Taylor

The New School - Bernard Schwartz Center for Economic Policy Analysis (CEPA)

Abstract

There are regular counterclockwise cycles involving capacity utilization u (horizontal axis) and the labor share b (vertical axis) in the US economy since 1929. As in Goodwin's cyclical growth model, b can be interpreted as a Lotka-Volterra predator variable and u as prey. In a phase diagram, dynamics around the u=0 schedule respond to effective demand that econometric estimation (1948-2002) shows to be profit-led. Distributive dynamics around the b=0 curve demonstrate a long-term profit squeeze. Across cycles, the real wage and labor productivity grow at 0.57 per cent per quarter, holding the labor share broadly stable. Modeling the cycle in the (u, b) plane provides a parsimonious description of demand and distributive dynamics, consistent with the macroeconomics embedded in the work of Kalecki, Steindl, Goodwin and many subsequent authors.

Suggested Citation

Barbosa-Filho, Nelson Henrique and Taylor, Lance, Distributive and Demand Cycles in the Us Economya Structuralist Goodwin Model. Metroeconomica, Vol. 57, No. 3, pp. 389-411, July 2006, Available at SSRN: https://ssrn.com/abstract=915965 or http://dx.doi.org/10.1111/j.1467-999X.2006.00250.x

Nelson Henrique Barbosa-Filho

Universidade Federal do Rio de Janeiro (UFRJ) - Institute of Economics ( email )

Rio de Janeiro, 22 290 080
Brazil

Lance Taylor (Contact Author)

The New School - Bernard Schwartz Center for Economic Policy Analysis (CEPA) ( email )

80 Fifth Ave.
5th Floor
New York, NY 10027
United States

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