Economic Cycles — Goodwin Model

Endogenous business cycles from labor share / employment dynamics

α (labor prod growth): 0.03

β (population growth): 0.02

δ (depreciation): 0.05

ρ (savings rate): 0.75

Goodwin (1967): Employment rate u and labor share v cycle perpetually without external shocks. Orange = labor share (wages/output), blue = employment rate. Phase plane shows the limit cycle attractor.