Endogenous business cycles and economic policy

Arbeitspapier

This paper examines the dynamics of Keynesian models that incorporate feedback effects from the labor market to income distribution, investment, aggregate demand and output. A baseline version of the model can generate endogenous growth cycles, but cumulative divergence and economic collapse also become possible for plausible parameter values. Extensions of the model that include monetary and Öscal policy show greater robustness: the local instability of the stationary point leads to limit cycles (rather than complete collapse), even when large, destabilizing changes are made to parameters describing the private sector. The robustness of the general approach is reinforced by the endogeneity of the Öscal and monetary policy rules.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Working Paper ; No. 2023-3

Classification and Topics

• Classification: Wirtschaft ; General Aggregative Models: Keynes; Keynesian; Post-Keynesian ; Business Fluctuations; Cycles ; Monetary Policy ; Fiscal Policy
• Subject: growth cycles ; Harrodian instability ; income distribution ; Taylor rule ; fiscal policy

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Skott, Peter
• Event: Veröffentlichung
• (who): University of Massachusetts, Department of Economics
• (where): Amherst, MA
• (when): 2023

Further information

• DOI: doi:10.7275/rzex-nz35
• Handle: http://hdl.handle.net/10419/283957
• Last update: 10.03.2025, 11:44 AM CET