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Dynamic investigations of an endogenous business cycle model with heterogeneous agents

Author

Listed:
  • Spiros Bougheas
  • Pasquale Commendatore
  • Laura Gardini
  • Ingrid Kubin

Abstract

We introduce agents heterogeneity into a model of endogenous business cycles, in which agents can invest either in "good" projects that contribute to future capital formation, or in "bad" projects without that property. The resulting map involves three distinct regimes, two of which we linearize. Using theoretical results on piecewise linear systems and on border collision bifurcations we are able to provide a comprehensive analysis of the dynamicsKeywords: business cycles, heterogeneous agents, piecewise linear systems, bufurcations

Suggested Citation

  • Spiros Bougheas & Pasquale Commendatore & Laura Gardini & Ingrid Kubin, 2023. "Dynamic investigations of an endogenous business cycle model with heterogeneous agents," Discussion Papers 2023/02, University of Nottingham, Centre for Finance, Credit and Macroeconomics (CFCM).
    • Handle: RePEc:not:notcfc:2023/02
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    References listed on IDEAS

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    1. Matsuyama, Kiminori & Sushko, Iryna & Gardini, Laura, 2016. "Revisiting the model of credit cycles with Good and Bad projects," Journal of Economic Theory, Elsevier, vol. 163(C), pages 525-556.
    2. Kubin, Ingrid & Zörner, Thomas O., 2021. "Credit cycles, human capital and the distribution of income," Journal of Economic Behavior & Organization, Elsevier, vol. 183(C), pages 954-975.
    3. Sushko, Iryna & Agliari, Anna & Gardini, Laura, 2006. "Bifurcation structure of parameter plane for a family of unimodal piecewise smooth maps: Border-collision bifurcation curves," Chaos, Solitons & Fractals, Elsevier, vol. 29(3), pages 756-770.
    4. Spiros Bougheas & Pasquale Commendatore & Laura Gardini & Ingrid Kubin, 2022. "Financial Development, Cycles and Income Inequality in a Model with Good and Bad Projects," CESifo Working Paper Series 10135, CESifo.
    5. ,, 2013. "The good, the bad, and the ugly: An inquiry into the causes and nature of credit cycles," Theoretical Economics, Econometric Society, vol. 8(3), September.
    6. Kubin, Ingrid & Zörner, Thomas O. & Gardini, Laura & Commendatore, Pasquale, 2019. "A credit cycle model with market sentiments," Structural Change and Economic Dynamics, Elsevier, vol. 50(C), pages 159-174.
    Full references (including those not matched with items on IDEAS)

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    Keywords

    business cycles; heterogeneous agents; piecewise linear systems; bufurcations;
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