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Vol. 65, No. 3, pp. 193-206 (2014)

“Unemployment, Growth and Distribution in a Goodwin-Kaldor Model: Dynamic Analysis of a Capitalist Economy”
Hiroyuki Yoshida (College of Economics, Nihon University)

This paper develops a Goodwin-Kaldor model to examine the dynamic properties of a capitalist economy with the problem of effective demand. An important finding is that the economy is essentially unstable because of the volatility of investment spending. What is more, we investigate the macroeconomic activity of the government sector, which conducts stabilization policy through the use of fiscal instruments. In this case we show that the government can stabilize the unstable economy by adopting a sufficiently strong fiscal policy. In addition, we obtain an accurate condition for the emergence of endogenous and perpetual growth cycles by means of Hopf bifurcation theory.