Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/266998 
Authors: 
Year of Publication: 
2022
Series/Report no.: 
Working Paper No. 2022-08
Publisher: 
University of Massachusetts, Department of Economics, Amherst, MA
Abstract: 
Mature economies may experience fluctuations, but the average medium and long run growth rate matches the natural rate. Like Kaldor's neo-Keynesian models, the Marx-Goodwin tradition explains this outcome by endogenizing the distribution of income and assuming that the accumulation of capital is increasing as a function of the profit share. The application of Goodwin cycles to developing economies may be hard to justify, however. The modified Goodwin models in this paper include relative-wage norms as a central element of wage formation. Norms change endogenously, leading to path dependence (hysteresis) in the stationary solution for the employment share of the modern sector. The effects of shocks - the sensitivity of the long-run outcome to initial conditions - may be amplified by non-linearities in the adjustment of wages to deviations of actual wages from the norm.
Subjects: 
Goodwin cycles
wage norms
employment hysteresis
JEL: 
E11
E32
O41
Creative Commons License: 
cc-by-nc-nd Logo
Document Type: 
Working Paper

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