||A two-sector Keynesian model of business cycles
In this paper, we examine the effect of sectoral interactions on business cycles in a simple Keynesian model. As a first step for introducing viewpoints of multiple sectors in the context of business cycles, we consider a dual economy in which there are only two kinds of goods: the consumption good and the investment good. By examining a two-sector Keynesian model, we intend to take a look at some phenomena induced by interactions between the consumption good sector and the investment good sector, which cannot be observed in one-sector models. We then find that the stability of equilibrium and the possibility of emergence of a periodic orbit depend upon whether the Keynesian stability condition holds or not and that the consumption good sector lags behind the investment good sector along the periodic orbit (business cycles). Also, we supplement the analysis by performing numerical simulations.