Arbeitspapier

Prosperity and Stagnation in Capitalist Economies

The KMG growth dynamics in Chiarella and Flaschel (2000) assume that wages, prices and quantities adjust sluggishly to disequilibria in labor and goods markets. This paper modifies the KMG model by introducing Steindlian features of capital accumulation and income distribution. The resulting KMGS(teindl) model replaces the neoclassical medium- and long-run features of the originalKMG model by a Steindlian approach to capital accumulation, as developed in a paper by Flaschel and Skott (2005). The model is of dimension 4 or 5, depending on the specification of the labor supply. We prove stability assertions and show that loss of stability always occurs by way of Hopf-bifurcations. When global stability gets lost, a nonlinear form of the Steindlian reserve army mechanism can ensure bounded dynamics. These dynamics are studied numerically and shown to exhibit long phases of prosperity, but also long phases of stagnant growth. JEL Categories: E24, E31, E32.

Language
Englisch

Bibliographic citation
Series: Working Paper ; No. 2005-12

Classification
Wirtschaft
Subject
KMGS dynamics
accelerating growth
stagnant growth
normal / adverse income shares adjustment
reserve army mechanisms

Event
Geistige Schöpfung
(who)
Asada, Toichiro
Flaschel, Peter
Skott, Peter
Event
Veröffentlichung
(who)
University of Massachusetts, Department of Economics
(where)
Amherst, MA
(when)
2005

Handle
Last update
10.03.2025, 11:41 AM CET

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Object type

  • Arbeitspapier

Associated

  • Asada, Toichiro
  • Flaschel, Peter
  • Skott, Peter
  • University of Massachusetts, Department of Economics

Time of origin

  • 2005

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