Cycles and Crises in a Model of Debt-financed Investment-led Growth
The paper demonstrates possibilities of both convergence to the steady state and emergence of stable growth cycles around it in a simple macrodynamic model of debt-financed investment-led growth. The growth cycles are robust and are generated endogenously, either due to the existence of a supercritical Andronov-Hopf bifurcation, or due to the global stability condition through an application of the Poincaré-Bendixson theorem. The emergence of multiple limit cycles is also observed under certain conditions. The possibility of a deterioration of financial variables during a boom, with the resulting financial crisis providing an endogenous ceiling to a business cycle is examined in this context.
|Date of creation:||12 Dec 2012|
|Date of revision:||12 Dec 2012|
|Contact details of provider:|| Postal: |
Web page: https://mpra.ub.uni-muenchen.de
More information through EDIRC
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.:
- Stiglitz, Joseph E & Weiss, Andrew, 1983. "Incentive Effects of Terminations: Applications to the Credit and Labor Markets," American Economic Review, American Economic Association, vol. 73(5), pages 912-27, December.
- Sébastien Charles, 2008. "Corporate debt, variable retention rate and the appearance of financial fragility," Cambridge Journal of Economics, Oxford University Press, vol. 32(5), pages 781-795, September.
- Carmen M. Reinhart & Kenneth S. Rogoff, 2009. "This Time Is Different: Eight Centuries of Financial Folly," Economics Books, Princeton University Press, edition 1, volume 1, number 8973.
- Jaffee, Dwight M & Russell, Thomas, 1976. "Imperfect Information, Uncertainty, and Credit Rationing," The Quarterly Journal of Economics, MIT Press, vol. 90(4), pages 651-66, November.
- Gilberto Tadeu Lima & Antonio J. A. Meirelles, 2004.
"A Macrodynamics Of Debt Regimes, Financial Instability And Growth,"
Anais do XXXII Encontro Nacional de Economia [Proceedings of the 32th Brazilian Economics Meeting]
074, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].
- Gilberto Tadeu Lima & Antonio J. A. Meirelles, 2007. "Macrodynamics of debt regimes, financial instability and growth," Cambridge Journal of Economics, Oxford University Press, vol. 31(4), pages 563-580, July.
- Carl Chiarella & Peter Flaschel & Willi Semmler, 2001.
"The macrodynamics of debt deflation,"
in: Financial Fragility and Investment in the Capitalist Economy, chapter 7
- Carl Chiarella & Peter Flaschel & Willi Semmler, 1999. "The Macrodynamics of Debt Deflation," SCEPA working paper series. SCEPA's main areas of research are macroeconomic policy, inequality and poverty, and globalization. 1999-04, Schwartz Center for Economic Policy Analysis (SCEPA), The New School.
- Antonio J.A. Meirelles & Gilberto Tadeu Lima, 2006.
"Debt, financial fragility, and economic growth: a Post Keynesian macromodel,"
Journal of Post Keynesian Economics,
M.E. Sharpe, Inc., vol. 29(1), pages 93-115, October.
- Antonio J. A. Meirelles & Gilberto Tadeu Lima, 2004. "Debt, Financial Fragility And Economic Growth: A Post-Keynesian Macromodel," Anais do XXXII Encontro Nacional de Economia [Proceedings of the 32th Brazilian Economics Meeting] 094, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].
- Thomas I. Palley, 1994. "Debt, Aggregate Demand, and the Business Cycle: An Analysis in the Spirit of Kaldor and Minsky," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 16(3), pages 371-390, April.
- Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
- Foley, Duncan K., 1987. "Liquidity-profit rate cycles in a capitalist economy," Journal of Economic Behavior & Organization, Elsevier, vol. 8(3), pages 363-376, September.
- Datta, Soumya, 2013. "Robustness and Stability of Limit Cycles in a Class of Planar Dynamical Systems," MPRA Paper 50814, University Library of Munich, Germany.
- Steve Keen, 1995. "Finance and Economic Breakdown: Modeling Minsky's "Financial Instability Hypothesis"," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 17(4), pages 607-635, July.
- Stiglitz, Joseph E & Weiss, Andrew, 1992. "Asymmetric Information in Credit Markets and Its Implications for Macro-economics," Oxford Economic Papers, Oxford University Press, vol. 44(4), pages 694-724, October.
- Fazzari, Steven & Ferri, Piero & Greenberg, Edward, 2008. "Cash flow, investment, and Keynes-Minsky cycles," Journal of Economic Behavior & Organization, Elsevier, vol. 65(3-4), pages 555-572, March.
- Mark Setterfield, 2004. "Financial fragility, effective demand and the business cycle," Review of Political Economy, Taylor & Francis Journals, vol. 16(2), pages 207-223.
- Richard Arena & Alain Raybaut, 2001. "On the foundations of Minsky's business cycle theory: an interpretation," Chapters, in: Financial Fragility and Investment in the Capitalist Economy, chapter 6 Edward Elgar.
- Soumya Datta, 2005. "Chaotic Dynamics Of Financing Investment," Metroeconomica, Wiley Blackwell, vol. 56(1), pages 58-84, 02.
- Semmler, Willi, 1987. "A macroeconomic limit cycle with financial perturbations," Journal of Economic Behavior & Organization, Elsevier, vol. 8(3), pages 469-495, September.
- George A. Akerlof, 2009. "How Human Psychology Drives the Economy and Why It Matters," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(5), pages 1175-1175.
- Edward A. Downe, 1987. "Minsky's Model of Financial Fragility: A Suggested Addition," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 9(3), pages 440-454, April.
- Vercelli, Alessandro, 2000. "Structural financial instability and cyclical fluctuations," Structural Change and Economic Dynamics, Elsevier, vol. 11(1-2), pages 139-156, July.
When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:50200. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht)
If references are entirely missing, you can add them using this form.