Agosto 2019 vol. 6 num. 1 - IV Encontro Nacional de Economia Industrial e Inovação
Artigo completo - Open Access.
The La Marca Model Revisited: Structuralist Goodwin Cycles with Evolutionary Supply Side and Balance of Payments Constraints
High economic volatility and large amplitude economic cycles are problems that persist in middle-income countries, especially Latin America, reinforcing the presence of development traps. This research is aimed at investigating the causes of this volatility. The existence of growth cycles has been broadly discussed in the literature since the times of Kondratiev and Schumpeter. However, the literature modeling endogenous deterministic mechanisms that generate these cycles is scarce. This article contributes to fill this gap by merging the macroeconomic demand-side perspective à la Goodwin-Kaldor with the evolutionary supply-side Neo-Schumpeterian theory - creating endogenous cycles. This article expands the open-economy Structuralist Goodwin model of La Marca (2010), in which economic activity, income distribution and accumulation of foreign assets dynamically interact generating dampened cycles. The expansion consists in adding to the model (1) an evolutionary supply-side in which innovation is at the center of the economic dynamic affecting the productivity through technology transfer and the Kaldor-Verdoorn effect. (2) An external sector dynamics that changes the exchange rate regime, following Dornbusch (1992)’s Latin Triangle theory. Nominal exchange rate behaves following the Balance of Payments Dominance theory (Ocampo, 2011), adjusting its value to avoid external sector deficits. Results point to (I) a productivity dynamics leading to the emergence of endogenous stable cycles. The economy does not converge to a steady state, and instability becomes a deterministic inherent characteristic of middle-income economies. (II) A change in the currency regime reduces volatility by turning a stable cycle trajectory into a monotonic convergence at the cost of lower economic activity and wage share (in total output).
Palavras-chave: Economic Cycles, Evolutionary theory, Structuralism, Macroeconomic Dynamics,
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Spinola, Danilo Sartorello; "The La Marca Model Revisited: Structuralist Goodwin Cycles with Evolutionary Supply Side and Balance of Payments Constraints", p. 265-273 . In: Anais do IV Encontro Nacional de Economia Industrial e Inovação.
São Paulo: Blucher,
ISSN 2357-7592, DOI 10.5151/iv-enei-2019-1.3-074
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