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

Mariolis, Theodore and Konstantakis, Konstantinos N. and Michaelides, Panayotis G. and Tsionas, Efthymios G. (2019) A non-linear Keynesian Goodwin-type endogenous model of the cycle : Bayesian evidence for the USA. Studies in Nonlinear Dynamics and Econometrics, 23 (1): 20160137. ISSN 1081-1826

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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.