This paper presents an abstract model of the business cycle in which the explanatory variables are the interaction between the rate of profit and the rate of investment. It proves that this exhibits stable, persistent cycles. It was written as a counter to Goodwin’s celebrated model in which the cycle is caused by the interaction between the wage and employment, and proves that cycles are possible even when these two variables are fixed. Thus, they cannot be considered the sole explanatory variables for the real phenomenon of cycles, as is commonly assumed in business cycle theory. It was submitted to the Economic Journal and rejected.

This post includes both the original English version and a Spanish version, kindly translated by Diego Guerrero.