Testing Goodwin: growth cycles in ten OECD countries

Abstract

Following Desai (1984), Goodwin's simple predator-prey growth cycle model of the economy (1967) is tested, using post-war data for ten OECD countries--Australia, Canada, Finland, France, Germany, Greece, Italy, Norway, the UK and the US. At a quantitative level, Goodwin's model is found not to be adequate: (i) estimated parameter values poorly predict the cycles' centres; and (ii) Goodwin's restrictive assumptions are not justified. However, at a qualitative level, the evidence presented here for the existence of Goodwin-type cycles is extremely encouraging, justifying both existing theoretical extensions of Goodwin's model and further empirical work in this area. Copyright 2000 by Oxford University Press.