Kaleckian Lags in General Equilibrium

The relationship between production lags and business cycles has a long history in economics, but was first analyzed rigorously by Michal Kalecki in 1935. In a linear delay differential equation model, Kalecki showed that production delays can endogenously generate cycles. Whether this result holds in general equilibrium has been an open question. An answer is provided by examining the effect of Kaleckian lags in the Solow and Cass-Koopmans growth models. It is shown that such models do produce endogenous cycles, confirming that Kalecki's model relating lags to cycles holds in general equilibrium settings.