ONE OF THE MOST vexing of the unsolved problems of dynamic economic

analysis is that of constructing a model which will reproduce adequately the

cyclical behavior of a modern industrial community. None of the schemes
so far advanced have (yet) offered a satisfactory endogenous explanation
of the persistent business fluctuations so characteristic of Western capitalism.
It is true that there exist theories which lead to oscillatory movements,
but, except under very special assumptions, these swings either die
down, or else they are explosive in nature.' In the latter case, appeal is
usually made to externally imposed constraints in order to limit the fluctuations
of the system,2 while, in the former case, exogenous shocks must be
introduced from time to time to rejuvenate the cyclical movement.3 Since
recourse to either of these devices is rather artificial, it is of interest to seek a
more satisfactory mechanism for the internal generation of a persistent
cyclical process.
While it is desirable for an economic model (or any other model, for that