Abstract
This article investigates the stability properties of the well-known Goodwin’s growth cycle model, when a production function with variable elasticity of substitution is considered. It is found that the latter amounts to the introduction of a dampening effect; hence, the equilibrium becomes locally asymptotically stable. However, if we assume endogenous labour productivity growth, this is not the only possible solution; the model can exhibit converging or diverging oscillations as well as closed concentric trajectories depending on the assumed opposite effects of ‘elasticity of (factor) substitution’ and ‘endogenous labour productivity growth’.
Subject
General Economics, Econometrics and Finance
Cited by
3 articles.
订阅此论文施引文献
订阅此论文施引文献,注册后可以免费订阅5篇论文的施引文献,订阅后可以查看论文全部施引文献