A non-linear approach to Kalecki's investment cycle

In this paper, looking at some new contributions to the Kalecki business cycle theory, we re-examine his 1935 model concerning the gestation period between orders and deliveries of capital goods. The model gives rise to a delay differential equation (DDE) with delay dependent coefficients depending on the time delay. The model has only one equilibrium point. Proved that a unique stability switch exists, we study the emergence of the Hopf bifurcation and the direction, stability and period of the bifurcating periodic solutions. We derive an explicit formula for determining the properties of the Hopf bifurcation by using the first Lyapunov coefficient. To confirm our analytic results, we consider two types of non-linear functions, all consistent with Kalecki's hypotheses: two S-shaped functions and one fractional function. Some comments dealing with the economic implications of our analysis are also included. (C) 2021 International Association for Mathematics and Computers in Simulation (IMACS). Published by Elsevier B.V. All rights reserved.

Automated summary

This paper revisits Kalecki's business cycle theory, focusing on the gestation period between orders and deliveries of capital goods. By analyzing the stability switch and Hopf bifurcation in the delay differential equation, the study provides insights into the dynamics of the model.