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Borrowing constraints and complex dynamics in an OLG framework

[journal article]

Assenza, Tiziana; Agliari, Anna; Gatti, Domenico Delli; Santoro, Emiliano

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Abstract In this paper we model an OLG economy à la Kiyotaki and Moore whose novel feature is the role of money as a store of value and of bequest as a source of funds to be "invested" in landholding. The dynamics generated by the model are generally characterized by irregular cyclical trajectories and, under special con.guration of the parameters, a strange attractor appears. In this setting, an expansionary monetary policy may have a stabilizing role due to the interaction between money holding and the accumulation of borrowers' net worth.
Classification Political Economy
Free Keywords E32; E52; Borrowing constraints; Credit cycles; Complex dynamics; Monetary policy
Document language English
Publication Year 2009
Page/Pages 656–669 p.
Journal Journal of Economic Behavior & Organization, 72 (2009) 2
DOI http://dx.doi.org/10.1016/j.jebo.2009.07.011
Status Postprint; peer reviewed
Licence PEER Licence Agreement (applicable only to documents from PEER project)