Borrowing constraints and complex dynamics in an OLG framework
| Authors |
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| Publication date | 2009 |
| Journal | Journal of Economic Behavior & Organization |
| Volume | Issue number | 72 | 2 |
| Pages (from-to) | 656-669 |
| Number of pages | 14 |
| Organisations |
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| 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.
Author Keywords: Borrowing constraints; Credit cycles; Complex dynamics; Monetary policy JEL classification codes: E32; E52 |
| Document type | Article |
| Published at | https://doi.org/10.1016/j.jebo.2009.07.011 |
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