Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/195420 
Year of Publication: 
2017
Citation: 
[Journal:] Revista de Métodos Cuantitativos para la Economía y la Empresa [ISSN:] 1886-516X [Volume:] 23 [Publisher:] Universidad Pablo de Olavide [Place:] Sevilla [Year:] 2017 [Pages:] 223-233
Publisher: 
Universidad Pablo de Olavide, Sevilla
Abstract: 
Goodwin's model is a set of ordinary differential equations and is a well-known model of the growth cycle. However, its four constants require an extensive numerical study of its two differential equations to identify all possible unsteady state behaviors, i.e. phase portraits, which corresponds to infinitely many combinations of numerical values of the constants. Qualitative interpretation of Goodwin's model solves these problems by replacing all numerical constants and all derivatives by trends (increasing, constant and decreasing). The model has two variables - the employment rate V, and the labour share U. A solution of the qualitative Goodwin's model is a scenario. An example of a Goodwin's scenario is - V is increasing more and more rapidly, U is decreasing and the decrease is slowing down. The complete set of all possible 41 Goodwin's scenarios and 168 time transitions among them are given. This result qualitatively represents all possible unsteady state Goodwin's behaviours. It is therefore possible to predict all possible future behaviours if a current behaviour is known/chosen. A prediction example is presented in details. No prior knowledge of qualitative model theory is required.
Subjects: 
Goodwin model
business cycle
qualitative
scenario
transition
JEL: 
E17
Creative Commons License: 
cc-by-sa Logo
Document Type: 
Article

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