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Pseudo-Goodwin cycles in a Minsky model

Stockhammer, E.; Michell, J.


E. Stockhammer

Jo Michell
Associate Professor in Economics


© The Author 2016. Published by Oxford University Press on behalf of the Cambridge Political Economy Society. All rights reserved. Goodwin cycles result from the dynamic interaction between a profit-led demand regime and a reserve army effect in income distribution. The paper proposes the concept of a pseudo-Goodwin cycle. We define this as a counter-clockwise movement in output and wage share space which is not generated by the usual Goodwin mechanism. In particular, it does not depend on a profit-led demand regime. As a demonstration, a simple Minsky model is extended by adding a reserve army distribution mechanism such that the wage share responds positively to output. In the extended Minsky model, cycles are generated purely through the interaction between financial fragility and demand. In a first step we assume no feedback from income distribution to demand. We demonstrate that the model generates a pseudo- Goodwin cycle in output-wage share space. In a second step, we show that the result continues to hold even if a wage-led demand regime is introduced, although this can introduce instability. Our models demonstrate that the existence of a counter- clockwise movement of output and the wage share cannot be regarded as proof of the existence of a Goodwin cycle and a profit-led demand regime.


Stockhammer, E., & Michell, J. (2017). Pseudo-Goodwin cycles in a Minsky model. Cambridge Journal of Economics, 41(1), 105-125.

Journal Article Type Article
Acceptance Date Feb 3, 2016
Online Publication Date Apr 27, 2016
Publication Date Jan 1, 2017
Deposit Date Apr 20, 2016
Journal Cambridge Journal of Economics
Print ISSN 0309-166X
Electronic ISSN 1464-3545
Publisher Oxford University Press (OUP)
Peer Reviewed Peer Reviewed
Volume 41
Issue 1
Pages 105-125
Keywords business cycles, Goodwin cycle, Minsky cycle, financial fragility, distribution cycles, post Keynesian economics
Public URL
Publisher URL
Additional Information Additional Information : This is a pre-copyedited, author-produced PDF of an article accepted for publication in Cambridge Journal of Economics following peer review. The version of record Stockhammer, E. and Michell, J. (2016) Pseudo-Goodwin cycles in a Minsky model. Cambridge Journal of Economics is available online at:


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