| Abstract: | This paper develops a non-linear differential-delay model of the Keynesian system. The non-linearities derive from a non-linear relationship between capacity utilization and profitability, interacting with the effect of profitability on rates of investment. Local stability properties are established analytically, and numerical techniques indicate the possibility of chaotic behavior for some configurations of parameters. The results suggest that profitability and growth can interact to produce some of the apparently stochastic components of growth cycles. |
