On the possible occurrence of duck solutions in domestic and two-region business cycle models

Abstract

The existence of duck solutions in two economic models is studied; one is the Goodwin's domestic business cycle model, and the other is a two-region business cycle model which is an extension of the Goodwin model obtained by coupling with interregional trade. Two types of investment functions are considered in each model. It is shown that there exist some situations in the two-region under which duck solutions occur, while the Goodwin model itself does not have a duck solution. Numerical experiments are presented to illustrate how duck solutions appear in the two-region model.