D. Delli Gatti
- Borrowing constraints and complex dynamics in an OLG framework
- Journal of Economic Behavior & Organization
- Volume | Issue number
- 72 | 2
- Pages (from-to)
- Number of pages
- Document type
- Faculty of Economics and Business (FEB)
- Amsterdam School of Economics Research Institute (ASE-RI)
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
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