Testing a Goodwin model with general capital accumulation rate

DOI10.1111/MECA.12204MaRDI QIDQ4618055zbMATH OpenOpenAlexWikidataFDO

Authors M. R. Grasselli, Aditya Maheshwari

Publication date 7 February 2019

Published in Metroeconomica (Search for Journal in Brave)

Full work available at URL https://arxiv.org/abs/1803.01536

zbMATH Keywords

endogenous growth cyclesmodified Goodwin model

Mathematics Subject Classification ID

Time series, auto-correlation, regression, etc. in statistics (GARCH) (62M10) Applications of statistics to actuarial sciences and financial mathematics (62P05) Economic time series analysis (91B84)

Abstract: We perform econometric tests on a modified Goodwin model where the capital accumulation rate is constant but not necessarily equal to one as in the original model (Goodwin, 1967). In addition to this modification, we find that addressing the methodological and reporting issues in Harvie (2000) leads to remarkably better results, with near perfect agreement between the estimates of equilibrium employment rates and the corresponding empirical averages, as well as significantly improved estimates of equilibrium wage shares. Despite its simplicity and obvious limitations, the performance of the modified Goodwin model implied by our results show that it can be used as a starting point for more sophisticated models for endogenous growth cycles.

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