ON THE NATURE/REASONS FOR THE LONG-TERM NON-LINEARITY OF ECONOMIC DEVELOPMENT
LADISLAV ANDRÁŠIK[1]
O povahe/dôvodoch dlhodobej nelinearity ekonomického rozvoja
https://doi.org/10.53465/ER.2644-7185.2022.1.45-73
Abstract: There are several different approaches to understanding the peculiar behaviour of economies in the global economic literature. The best known of these is the business cycle theory, which we have referred to as the "conventional theory of the non-linear behaviour of economies" to better distinguish it from the others. For a typical graphical representation, the well-known sine smooth graph is usually used. There are also newer approaches using mathematical, econometric and ecological methods. However, the approach of the author of this essay differs from all others in ontological and methodological aspects. In this paper, among other things, we present an extension of Goodwin's growth cycle model, in which the capacity utilization rate is treated as a new variable in a modified Lotka-Volterra system of differential equations (1956) to the study of distribution cycles. This approach is intended to clarify the links between demand, the labour market and capital accumulation in a model in which a cyclical pattern is established between the employment rate, the profit share and the capacity utilisation rate. The resulting model is then examined qualitatively and the conditions for a limit cycle are explored. Finally, the model is tested on the US economy with quarterly data from 1967 to 2016. The model has a system of differential equations for the utilization rate, the profit share and the employment rate. The second example comes from a slight modification of the original duopoly model of Cournot. Next, in the third example, we visualize Mordechai Ezekiel's famous spider's web theorem using Excel.
Keywords: Business cycles, Goodwin, Kaldor, Marx, modelling/simulating long-run economic development, structural economic dynamics, endogenous cycles, parameter estimation, employment rates, income shares.
JEL Classification: C13, E11, C61, E32, F02, F43, F47, O11, O41
Fulltext: PDF
Online publication date: 21 March 2022
To cite this article (APA style):
Andrášik, L. (2022). On the Nature/Reasons for the Long-Term Non-Linearity of Economic Development. Ekonomické rozhľady – Economic Review, 51(1), 45 – 73. https://doi.org/10.53465/ER.2644-7185.2022.1.45-73
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This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
[1]Ladislav Andrášik DrSc. (D.Sc.), Slovak University of Technology, Slovak Republic, e-mail: ladislav.andrasik@gmail.com
