Pseudo, or Not? Neo‐Goodwinian Growth Cycles With Financial Linkages

ABSTRACT A profit‐led Goodwin mechanism generates the observed counterclockwise activity–labor share cycle. Introducing a financial linkage can reproduce this pattern even when demand is not profit‐led. This paper extends neo‐Goodwinian theory by incorporating the valuation ratio into a four‐dimensional model. We show that the model can generate a limit cycle and that the Goodwin pattern arises in simulations without profit‐led demand when financial interactions are present. Redistribution affects cyclical dynamics but has no steady‐state growth effects.