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The dynamics of the NAIRU model with two switching regimes

Author

Listed:
  • Fabio Tramontana

    () (Department of Economics, University of Ancona, Italy)

  • Laura Gardini

    () (Department of Economics and Quantitative Methods, University of Urbino, Italy)

  • Piero Ferri

    () (Department of Economics, University of Bergamo, Italy)

Abstract

We consider a model of inflation and unemployment proposed in Ferri et al. (JEBO, 2001), in which the dynamics are described by a discontinuous piecewise linear map, made up of two branches. We shall show that the bounded dynamics may be classified in two cases: we may have either regular dynamics with stable cycles of any period or quasiperiodic trajectories, or only chaotic dynamics (pure chaos in which a unique absolutely continuous invariant ergodic measure exists, and structurally stable),in a rich variety of cyclical chaotic intervals. The main results are the analytical formulation of the border collision bifurcation curves, through which we give a complete picture of the possible outcomes of the model.

Suggested Citation

  • Fabio Tramontana & Laura Gardini & Piero Ferri, 2010. "The dynamics of the NAIRU model with two switching regimes," Working Papers 1004, University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini, revised 2010.
  • Handle: RePEc:urb:wpaper:10_04
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Tramontana, Fabio & Westerhoff, Frank & Gardini, Laura, 2010. "On the complicated price dynamics of a simple one-dimensional discontinuous financial market model with heterogeneous interacting traders," Journal of Economic Behavior & Organization, Elsevier, vol. 74(3), pages 187-205, June.
    2. Piero Ferri, 2013. "Income distribution and debts in a fragile economy: market processes and macro constraints," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 8(2), pages 219-230, October.
    3. Roya Makrooni & Laura Gardini, 2015. "Bifurcation structures in a family of one-dimensional linear-power discontinuous maps," Gecomplexity Discussion Paper Series 7, Action IS1104 "The EU in the new complex geography of economic systems: models, tools and policy evaluation", revised Jan 2015.
    4. Elena Olmedo, 2014. "Forecasting Spanish Unemployment Using Near Neighbour and Neural Net Techniques," Computational Economics, Springer;Society for Computational Economics, vol. 43(2), pages 183-197, February.
    5. Piero Ferri, 2011. "Macroeconomics of Growth Cycles and Financial Instability," Books, Edward Elgar Publishing, number 14260.

    More about this item

    Keywords

    Phillips curve; Regime switching; NAIRU; Nonlinearities; Discontinuous maps.;

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium

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