Chapter

Growing in Short and Long Waves: Schumpeter

Richard M. Goodwin

in Chaotic Economic Dynamics

Published in print November 1990 | ISBN: 9780198283355
Published online November 2003 | e-ISBN: 9780191596315 | DOI: http://dx.doi.org/10.1093/0198283350.003.0004
 Growing in Short and Long Waves: Schumpeter

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Combines long and short waves of innovation. A model is constructed in which demand effects enhance an innovation logistic: innovation is preceded by investment, which stimulates demand, in turn facilitating the spread of the innovation. Each innovative burst produces a wave of output growth. A major innovation (e.g. steam, electricity) with a 50‐year logistic can distort an underlying 8‐year economic cycle, producing a great boom followed by a bust. A limitation of the model is that each wave returns to its initial level. A continuous time model with a growth cycle (and a Rössler attractor) overcomes this limitation.

Keywords: cycles; demand; innovation; investment; Joseph; Kondratiev; long wave theory; output; Rössler attractor; Schumpeter

Chapter.  2776 words.  Illustrated.

Subjects: Macroeconomics and Monetary Economics

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