Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/283957 
Authors: 
Year of Publication: 
2023
Series/Report no.: 
Working Paper No. 2023-3
Publisher: 
University of Massachusetts, Department of Economics, Amherst, MA
Abstract: 
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.
Subjects: 
growth cycles
Harrodian instability
income distribution
Taylor rule
fiscal policy
JEL: 
E12
E32
E52
E62
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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