UNU-MERIT Working Papers Series
The La Marca Model revisited: Structuralist Goodwin cycles with evolutionary supply side and balance of payments constraints
Danilo Spinola #2020-002This 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 Classification: E32, F44, O11, O30
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