The main task of this work is to develop a model able to encompass, at the same time, Keynesian, demand-driven, and Marxian, profit-driven, determinants of fluctuations. Our starting point is the Goodwin model (1967), rephrased in discrete time and extended by means of a full coupled dynamics structure. The model adds the combined interaction of a demand effect, which resembles a rudimentary first approximation to an accelerator, and of a hysteresis effect in wage formation in turn affecting investments. Our model yields “business cycle” movements either by means of persistent oscillations, or chaotic motions. These two different dynamical paths accounting for the behaviour of the system are influenced by its (predominantly) profit-led or demand-led structures.
- Endogenous growth Business cycles Investment Predator-prey dynamics Aggregate demand Accelerator Complex systems Non-linearity Chaos theory