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Borrowing constraints and complex dynamics in an OLG framework

Author Info

  • 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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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
Contact details of provider: Web page: http://www.elsevier.com/locate/jebo

Keywords: Borrowing constraints Credit cycles Complex dynamics Monetary policy;

Other versions of this item:

Find related papers by JEL classification:
  • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
  • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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  1. Juan Carlos Cordoba & Marla Ripoll, 2003. "Collateral Constraints in a Monetary Economy," Macroeconomics 0309003, EconWPA.
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  3. Nobuhiro Kiyotaki & John Moore, 1995. "Credit Cycles," NBER Working Papers 5083, National Bureau of Economic Research, Inc.
  4. Grandmont, Jean-Michel & Pintus, Patrick & de Vilder, Robin, 1998. "Capital-Labor Substitution and Competitive Nonlinear Endogenous Business Cycles," Journal of Economic Theory, Elsevier, vol. 80(1), pages 14-59, May.
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  8. 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.
  9. Norman Loayza & Klaus Schmidt-Hebbel & Luis Servén, 1999. "What Drives Private Saving Across the World?," Working Papers Central Bank of Chile 47, Central Bank of Chile.
  10. Kenneth Kasa, 1998. "Borrowing constraints and asset market dynamics: evidence from the Pacific Basin," Economic Review, Federal Reserve Bank of San Francisco, pages 17-28.
  11. Jean-Michel Grandmont & Yves Younes, 1973. "On the Efficiency of a Monetary Equilibrium," Review of Economic Studies, Oxford University Press, vol. 40(2), pages 149-165.
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  13. Loayza, Norman & Schmidt-Hebbel, Klaus & Serven, Luis, 2000. "What drives private saving around the world?," Policy Research Working Paper Series 2309, The World Bank.
  14. Mohsin S. Khan & Abdelhak S Senhadji & Bruce D. Smith, 2001. "Inflation and Financial Depth," IMF Working Papers 01/44, International Monetary Fund.
  15. Timothy J. Kehoe & David K. Levine & Michael Woodford, 1992. "The Optimum Quantity of Money Revisited," Levine's Working Paper Archive 2035, David K. Levine.
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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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