Working Paper #2020-002
The La Marca Model revisited: Structuralist Goodwin cycles with evolutionary supply side and balance of payments constraints
This research investigates the causes of endogenous volatility in Latin
America by expanding the La Marca (2010) model. The expansion consists
in study: (I) Price-neutrality, (II) stability of the external sector,
and (III) fixed income distribution. We also add (IV) an evolutionary
supply-side in which productivity is at the centre of the economic
dynamic through international technology transfer and the
Kaldor-Verdoorn effect. The results show that (1) Latin American
parameter values increase the endogenous oscillatory adjustment. (2) In
all cases the model converges. (3) The price-neutrality assumption and
external sector stability depend on specific parameter values to show
either a cyclical or a monotonic convergence pattern. (4) Fixed income
distribution lead to a monotonic trajectory, reducing oscillations. (5)
The inclusion of the productivity dynamics generates new sources of
volatility in the relationship between productivity, capacity
utilization, and net external assets.
- Keywords
-
- Economic Cycles
- Structuralism
- Macroeconomic Dynamics
- JEL codes
-
- E32
- F44
- O11
- O30
Cite this as
APA 7th ed.Spinola, D. (2020). The La Marca Model revisited: Structuralist Goodwin cycles with evolutionary supply side and balance of payments constraints (UNU-MERIT Working Paper No. 2020-002). UNU-MERIT. https://unu-merit.nl/publications/working-papers/abstract/?id=8434