This research is aimed at investigating the causes of volatility that affect middle-income countries by studying the La Marca model. Drawing from the open-economy Goodwin tradition, this model demonstrates that economic activity, income distribution and accumulation of foreign assets dynamically interact, resulting in a pattern of dampened cycles. The study consists in analyzing the characteristics of the model by initially imposing: (I) a constant real exchange rate; (II) a constant net external asset to capital ratio, which is in line with the balance of payments dominance theory and (III) a fixed income distribution. We then (IV) expand the original model by adding an evolutionary supply-side in which productivity is at the center of the economic dynamic through international technology transfer and the Kaldor-Verdoorn effect.
- o47 - "Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence"
- o49 - Economic Growth and Aggregate Productivity: Other
- o39 - Technological Change: Other
- endogenous technical change
- growth cycles
- macroeconomic dynamics
- ENDOGENOUS TECHNICAL CHANGE