Goodwin's predator—prey model is structurally unstable, with an equilibrium that is neither stable nor unstable. Ploeg showed that relaxing the hypothesis of fixed proportion technology would stabilize the equilibrium. On the other hand, Goodwin showed that the equilibrium becomes unstable when endogenous productivity growth is considered. I study the consequences of considering both effects and conclude that the stabilizing effect of a flexible technology is much stronger than the destabilizing effect of endogenizing labor productivity.
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