Abstract for: Employment-Centred Stabilisation Policy Propelling the Economy to “Escape Velocity”

The paper refines and generalizes the Fanti and Manfredi Goodwinian model with delayed profit-sharing allowing capital investment lower than profit. Although periodic dynamics arise via simple Andronov – Hopf bifurcation for large “humped” delays, the opponents’ proposition that the wage-profit indexation triggers persistent economic cycles is incorrect. The paper reveals detrimental effects of the profit-sharing rule for economic reproduction in the long run even when it alleviates oscillations. This paper revises the equations for profit-sharing and bargained wage terms from the opponents’ model in two encompassing non-linear four-dimensional models. The previous model enabled extreme condition tests for them. In the first, before second-order delay is added, a growth rate of profit is proportional to a gap between the indicated and current employment ratios. This policy rule with a great margin of safety stabilises capital accumulation being fuzzier for stretched “humped” delays. In the second model, deviations of employment ratio and delayed profit rate from their stationary magnitudes define net change of relative wage. This proportional control already present in the first model is reinforced in the second shortening a transient to a distant target employment ratio. Parametric optimisation for both models is supported by Vensim.