Controlling Chaotic Fluctuations through Monetary Policy

Takao Asano (), Akihisa Shibata and Masanori Yokoo ()
Additional contact information
Takao Asano: Okayama University
Masanori Yokoo: Okayama University

No 1091, KIER Working Papers from Kyoto University, Institute of Economic Research

Abstract: This paper applies the chaos control method (the OGY method) proposed by Ott et al. (1990, Physical Review Letters) to policy making in macroeconomics. This paper demonstrates that the monetary equilibrium paths in a discrete-time, two-dimensional overlapping generations model exhibit chaotic fluctuations depending on the money supply rate and the elasticity of substitution between capital and labor under the assumption of the constant elasticity of substitution (CES) production function. We also show that the chaotic fluctuations can be stabilized by controlling the money supply rate by using the OGY method.

Keywords: Macroeconomy; Chaos Control; OGY method; Monetary Policy; OLG model; Chaos (search for similar items in EconPapers)
Pages: 32 pages
Date: 2023-01
New Economics Papers: this item is included in nep-cba, nep-dge and nep-mon
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Journal Article: Controlling Chaotic Fluctuations through Monetary Policy (2025)
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Persistent link: https://EconPapers.repec.org/RePEc:kyo:wpaper:1091

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