A non-linear Keynesian Goodwin-type endogenous model of the cycle: Bayesian evidence for the USA

Theodore Mariolis, Konstantinos N. Konstantakis, Panayotis G. Michaelides
  • Corresponding author
  • Laboratory of Theoretical and Applied Economics, School of Applied Mathematics and Physics, National Technical University of Athens, Heroon Polytechneiou 9, 157.80, Zografou Campus, Athens, Greece
  • Systemic Risk Centre, London School of Economics, London, UK
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and Efthymios G. Tsionas
  • Athens University of Economics and Business, Athens, Greece
  • Lancaster University Management School, Lancaster, UK
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Abstract

This paper incorporates the so-called Bhaduri-Marglin accumulation function in Goodwin’s original growth cycle model and econometrically estimates the proposed model for the case of the US economy in the time period 1960–2012, using a modern Bayesian sequential Monte Carlo method. Based on our findings, the US economy follows an exhilarationist regime throughout our investigation period with the sole exception of an underconsumption regime for the time period 1974–1978. In general, the results suggest that the proposed approach is an appropriate vehicle for expanding and improving traditional Goodwin-type models.

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SNDE recognizes that advances in statistics and dynamical systems theory can increase our understanding of economic and financial markets. The journal seeks both theoretical and applied papers that characterize and motivate nonlinear phenomena. Researchers are required to assist replication of empirical results by providing copies of data and programs online. Algorithms and rapid communications are also published.

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