A Metzlerian business cycle model with nonlinear heterogeneous expectations
AbstractMetzler's model is an important contribution to our understanding of the dynamics of business cycles. In his model, the production of consumption goods depends on expected future sales. However, Metzler assumes that producers are homogeneous and follow a simple expectation formation rule. Taking into account that in reality producers might not only follow several expectation formation rules, but might also even switch between them, we reformulate Metzler's original model. As it turns out endogenous business cycles may emerge within our model, i.e. changes in production and inventory are (quasi-)periodic for certain parameter combinations.
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Bibliographic InfoArticle provided by Elsevier in its journal Economic Modelling.
Volume (Year): 26 (2009)
Issue (Month): 3 (May)
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Web page: http://www.elsevier.com/locate/inca/30411
Business cycles Inventory adjustment Heterogeneous expectations Nonlinear dynamics Neimark-Sacker bifurcation;
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