A KEYNES-GOODWIN MODEL OF THE BUSINESS-CYCLE

The paper puts forward a dynamic IS-LM model in four state variables r epresenting real balances, inflation, income distribution, and a so-ca lled state of confidence. Local (in)stability is characterized by (hig h) low interest elasticities of money demand. Also a Hopf bifurcation can be shown to exist. Freezing inflation and distribution makes a mat hematical analysis of the main stability mechanisms in the outer regio ns possible. The global dynamics of the full system is studied by mean s of numerical simulations. It gives rise to unique and stable limit c ycles. Lastly, a sensitivity analysis inquires into the impact of para meter changes on the main cycle features.