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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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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;

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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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