Keynes-Friedman and Keynes-Marx models of monetary growth

Abstract

The paper introduces a Keynes-Wicksell type model which generalizes a textbook model of Sargent (1987). It shows that the steady state of the model is locally asymptotically stable if two economically meaningful conditions are imposed on it. We then investigate two important limit cases with further stability properties. Case 1 has characteristics which are close to Sargent's Friedman version of such a Keynes-Wicksell dynamics, while case 2 is of a twofold Classical cross-dual type, with features of the process of equalizing profit rates as well as socalled profit-squeeze mechanisms. We close the paper with some numerical simulations of the latter approach to a Classical type of business cycle theory.