QUASI GROWTH CYCLE-GOODWIN, HARROD-

Goodwin, Harrod

Abstract

This paper examines Harrodian instability by using the model in which a representative firm maximizes its own profit rate taking a subjective demand function into account. The subjective demand function considered by the firm contains the aggregate demand of economy as an important parameter. This implies that the firm would pay attention to the economic state as a whole. The analysis based on this model shows that its stationary state can be asymptotically stable or there can exist closed cycles around the stationary state in spite of Harrodian investment behavior. Applying the Hopf bifurcation theorem we can demonstrate such character of the dynamic system considered in this paper. Disequilibrium may take place at the stationary state, hence, we call the fluctuation "quasi growth cycle."