Deterministic randomness in a model of finance and growth
AbstractFollowing the literature on growth, cycles and financial development, this paper develops an endogenous growth model where the source of endogenous business cycles relates to the allocation of credit between productive investment and consumption. An important role is given to consumer sentiment, because this determines the willingness of households in terms of demand for credit; in particular, optimistic beliefs about the economyâs macro performance deviate financial resources from investment in favour of consumption. The dynamic analysis indicates that Neimark-Sacker and flip bifurcations eventually separate stable and unstable manifolds, and as a result a region of nonlinear motion is generated: cycles of various periodicities and chaotic motion characterize the behaviour of the long run time paths of accumulated wealth, output and consumption.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Springer in its journal Journal of Evolutionary Economics.
Volume (Year): 20 (2010)
Issue (Month): 1 (January)
Contact details of provider:
Web page: http://link.springer.de/link/service/journals/00191/index.htm
Other versions of this item:
- Gomes, Orlando, 2007. "Deterministic randomness in a model of finance and growth," MPRA Paper 2888, University Library of Munich, Germany.
- C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
- O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Boldrin, Michele & Nishimura, Kazuo & Shigoka, Tadashi & Yano, Makoto, 2001. "Chaotic Equilibrium Dynamics in Endogenous Growth Models," Journal of Economic Theory, Elsevier, vol. 96(1-2), pages 97-132, January.
- Amable, Bruno & Chatelain, Jean-Bernard & Ralf, Kirsten, 2004.
"Credit rationing, profit accumulation and economic growth,"
Elsevier, vol. 85(3), pages 301-307, December.
- Amable, Bruno & Jean-Bernard Chatelain & Kirsten RALF, 2002. "Credit Rationing, Profit Accumulation and Economic Growth," Royal Economic Society Annual Conference 2002 5, Royal Economic Society.
- Jean-Bernard Chatelain & Bruno Amable & Kirsten Ralf, 2004. "Credit rationing, profit accumulation and economic growth," UniversitÃ© Paris1 PanthÃ©on-Sorbonne (Post-Print and Working Papers) halshs-00112521, HAL.
- Lawrence J. Christiano & Sharon G. Harrison, 1996.
"Chaos, Sunspots, and Automatic Stabilizers,"
NBER Working Papers
5703, National Bureau of Economic Research, Inc.
- Lawrence J. Christiano & Sharon G. Harrison, 1996. "Chaos, sunspots, and automatic stabilizers," Working Paper Series, Macroeconomic Issues WP-96-16, Federal Reserve Bank of Chicago.
- Lawrence J. Christiano & Sharon G. Harrison, 1996. "Chaos, sunspots, and automatic stabilizers," Staff Report 214, Federal Reserve Bank of Minneapolis.
- Jordi Caballé & Xavier Jarque & Elisabetta Michetti, 2004.
"Chaotic Dynamics in Credit Constrained Emerging Economies,"
121, Barcelona Graduate School of Economics.
- Caballe, Jordi & Jarque, Xavier & Michetti, Elisabetta, 2006. "Chaotic dynamics in credit constrained emerging economies," Journal of Economic Dynamics and Control, Elsevier, vol. 30(8), pages 1261-1275, August.
- Jordi Caballe & Xavier Jarque & Elisabetta Michetti, 2004. "Chaotic Dynamics in Credit Constrained Emerging Economies," UFAE and IAE Working Papers 605.04, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
- Levine, Ross, 1996.
"Financial development and economic growth : views and agenda,"
Policy Research Working Paper Series
1678, The World Bank.
- Ross Levine, 1997. "Financial Development and Economic Growth: Views and Agenda," Journal of Economic Literature, American Economic Association, vol. 35(2), pages 688-726, June.
- Aloi, Marta & Dixon, Huw D. & Lloyd-Braga, Teresa, 2000.
"Endogenous fluctuations in an open economy with increasing returns to scale,"
Journal of Economic Dynamics and Control,
Elsevier, vol. 24(1), pages 97-125, January.
- Marta Aloi & Huw D. Dixon & Teresa Lloyd-Braga, 1998. "Endogenous Fluctuations In an Open Economy with Increasing Returns to Scale," Discussion Papers 98-03, University of Copenhagen. Department of Economics.
- Cazzavillan, Guido & Lloyd-Braga, Teresa & Pintus, Patrick, 1996.
"Multiple steady states and endogenous fluctuations with increasing returns to scale in production,"
CEPREMAP Working Papers (Couverture Orange)
- Cazzavillan, Guido & Lloyd-Braga, Teresa & Pintus, Patrick A., 1998. "Multiple Steady States and Endogenous Fluctuations with Increasing Returns to Scale in Production," Journal of Economic Theory, Elsevier, vol. 80(1), pages 60-107, May.
- G, Cazzavillan & T, Lloyd-Braga & P, A, Pintus, 1997. "Multiple Steady States and Endogenous Fluctuations with Increasing Returns to Scale in Production," Working Papers 97-29, Centre de Recherche en Economie et Statistique.
- Cellarier, Laurent, 2006. "Constant gain learning and business cycles," Journal of Macroeconomics, Elsevier, vol. 28(1), pages 51-85, March.
- Ganelli, Giovanni & Tervala, Juha, 2010.
"Public infrastructures, public consumption, and welfare in a new-open-economy-macro model,"
Journal of Macroeconomics,
Elsevier, vol. 32(3), pages 827-837, September.
- Ganelli , Giovanni & Tervala, Juha, 2009. "Public infrastructures, public consumption and welfare in a new open economy macro model," Research Discussion Papers 8/2009, Bank of Finland.
- Giovanni Ganelli & Juha Tervala, 2007. "Public Infrastructures, Public Consumption, and Welfare in a New-Open-Economy-Macro Model," IMF Working Papers 07/67, International Monetary Fund.
- Philippe Aghion & Abhijit Banerjee & Thomas Piketty, 1999.
"Dualism And Macroeconomic Volatility,"
The Quarterly Journal of Economics,
MIT Press, vol. 114(4), pages 1359-1397, November.
- Piketty, Thomas & Banerjee, Abhijit & Aghion, Philippe, 1997. "Dualism and macroeconomic volatility," CEPREMAP Working Papers (Couverture Orange) 9720, CEPREMAP.
- Piketty, Thomas & Banerjee, Abhijit & Aghion, Philippe, 1999. "Dualism and Macroeconomic Volatility," Scholarly Articles 4554124, Harvard University Department of Economics.
- David Gross & Nicholas Souleles, 2001.
"Consumer Response to Changes in Credit Supply: Evidence from Credit Card Data,"
Center for Financial Institutions Working Papers
01-10, Wharton School Center for Financial Institutions, University of Pennsylvania.
- David B. Gross & Nicholas S. Souleles, 2000. "Consumer Response to Changes in Credit Supply: Evidence from Credit Card Data," Center for Financial Institutions Working Papers 00-04, Wharton School Center for Financial Institutions, University of Pennsylvania.
- Bacchetta, Philippe & Aghion, Philippe & Banerjee, Abhijit, 2004.
"Financial Development and the Instability of Open Economies,"
4554209, Harvard University Department of Economics.
- Aghion, Philippe & Bacchetta, Philippe & Banerjee, Abhijit, 2004. "Financial development and the instability of open economies," Journal of Monetary Economics, Elsevier, vol. 51(6), pages 1077-1106, September.
- Philippe Aghion & Philippe Bacchetta & Abhijit Banerjee, 2004. "Financial Development and the Instability of Open Economies," NBER Working Papers 10246, National Bureau of Economic Research, Inc.
- Orlando Gomes, 2006. "Routes to chaos in macroeconomic theory," Journal of Economic Studies, Emerald Group Publishing, vol. 33(6), pages 437-468, November.
- Boldrin, Michele & Montrucchio, Luigi, 1986. "On the indeterminacy of capital accumulation paths," Journal of Economic Theory, Elsevier, vol. 40(1), pages 26-39, October.
- Levine, Ross, 2005.
"Finance and Growth: Theory and Evidence,"
Handbook of Economic Growth,
in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 12, pages 865-934
- Guo, Jang-Ting & Lansing, Kevin J., 2002.
"Fiscal Policy, Increasing Returns, And Endogenous Fluctuations,"
Cambridge University Press, vol. 6(05), pages 633-664, November.
- Jang-Ting Guo & Kevin Lansing, 1999. "Fiscal policy, increasing returns, and endogenous fluctuations," Working Papers in Applied Economic Theory 99-08, Federal Reserve Bank of San Francisco.
- Lloyd-Braga, Teresa & Nourry, Carine & Venditti, Alain, 2005.
"Indeterminacy in Dynamic Models: When Diamond Meets Ramsey,"
CEPR Discussion Papers
5255, C.E.P.R. Discussion Papers.
- Lloyd-Braga, Teresa & Nourry, Carine & Venditti, Alain, 2007. "Indeterminacy in dynamic models: When Diamond meets Ramsey," Journal of Economic Theory, Elsevier, vol. 134(1), pages 513-536, May.
- Nishimura Kazuo & Sorger Gerhard, 1996. "Optimal Cycles and Chaos: A Survey," Studies in Nonlinear Dynamics & Econometrics, De Gruyter, vol. 1(1), pages 1-20, April.
- Deneckere, Raymond & Pelikan, Steve, 1986. "Competitive chaos," Journal of Economic Theory, Elsevier, vol. 40(1), pages 13-25, October.
- Benhabib, Jess & Day, Richard H, 1981. "Rational Choice and Erratic Behaviour," Review of Economic Studies, Wiley Blackwell, vol. 48(3), pages 459-71, July.
- Grandmont, Jean-Michel, 1985. "On Endogenous Competitive Business Cycles," Econometrica, Econometric Society, vol. 53(5), pages 995-1045, September.
- Day, Richard H, 1982. "Irregular Growth Cycles," American Economic Review, American Economic Association, vol. 72(3), pages 406-14, June.
- repec:cup:macdyn:v:6:y:2002:i:5:p:633-64 is not listed on IDEAS
- Edward M Feasel & Nobuyuki Kanazawa, 2013. "Sentiment toward Trading Partners and International Trade," Eastern Economic Journal, Palgrave Macmillan, vol. 39(3), pages 309-327.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Guenther Eichhorn) or (Christopher F Baum).
If references are entirely missing, you can add them using this form.