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Borrowing constraints and complex dynamics in an OLG framework

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

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 configuration 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.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Behavior & Organization.

Volume (Year): 72 (2009)
Issue (Month): 2 (November)
Pages: 656-669

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Handle: RePEc:eee:jeborg:v:72:y:2009:i:2:p:656-669

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Keywords: Borrowing constraints Credit cycles Complex dynamics Monetary policy;

References

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  1. Weil, Philippe, 1991. "Is Money Net Wealth?," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 32(1), pages 37-53, February.
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  14. Weiss, Laurence M, 1980. "The Effects of Money Supply on Economic Welfare in the Steady State," Econometrica, Econometric Society, vol. 48(3), pages 565-76, April.
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Cited by:
  1. Kunieda, Takuma & Shibata, Akihisa, 2011. "Endogenous Growth and Fluctuations in an Overlapping Generations Economy with Credit Market Imperfections," MPRA Paper 35698, University Library of Munich, Germany.

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