Stability and Oscillations in a Dynamical Kaldorian Model

In a classic paper N.Kaldor (1940) presented a model of a closed economy and demonstrated the existence of a periodic orbit which may be interpreted as a trade cycle in an autonomous system.1 In establishing this result he assumed not only that investment and saving decisions are made without any time lag, but also that investment is adjusted to saving instantaneously so far as the adjustment is possible by a small change in output. Thus, in his model, non-negligible adjustment period is taken into account only in installing capital and making it ready for production.