A Kaleckian macromodel with memory

In this paper, we consider a standard short-run Kaleckian macromodel developed by Charles (2010), where the author, according to well-known Post-Keynesian models such as Delli Gatti, Gallegati and Gardini (1993), proposes different specifications for an endogenous propensity to invest and analyzes the short-run dynamics of the model. It is shown that when firms' managers adopt abnormal behaviours, due to pressures from shareholders regarding the propensity to invest, the system exhibits bifurcation phenomena and complex behaviour. The analysis emphasizes that the behaviour of stockholders (and institutions that own portfolios) may be destabilizing for a financial capitalist economy. The endogenous propensity to invest proposed in Charles is a function of the current capacity utilization of the economic system, in this paper we extend the approach by considering an endogenous propensity to invest with memory: not only the current but also the past utilization capacity define, through a weighted average, the propensity to invest. In this way, a planar map is obtained and an analysis of the dynamical behaviours is conducted. We show that memory has a stabilizing role when the weighted average is close to an uniform distribution, otherwise, when the weighted average takes extreme values, the system is destabilized through flip or Neimark-Saker bifurcations.