 Nonlinear dynamics in real economy and financial markets: The role of dividend policies in fluctuationsFrancesca Grassetti, Cristiana Mammana and Elisabetta Michetti Chaos, Solitons & Fractals, 2022, vol. 160, issue C Abstract: This paper investigates how dividend policies may influence the creation and propagation of cycles between real economy and financial markets. We focus on the effect of a constant dividend policy on the stability of the aggregate economy, by means of a discrete dynamical framework in which managers, individuals and financial mediators coexist. We show the counter-intuitive effect of the dividend payout ratio: in a developed economy, an increase in dividends leads to a lower stock price level due to the cross-feedback effect between markets. Moreover, in non-developed economies the choice of managers and individuals may not influence the propagation of fluctuations, while in developed economies, high payout ratios and high sensitivity to market trends trigger a cross-feedback effect between the two markets that amplifies their volatility and drags the whole economy into fluctuations and cycles. Keywords: Discrete nonlinear dynamics; Period doubling bifurcations; Economic growth; Dividend payout ratio; Behavioural finance; Economic development (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:chsofr:v:160:y:2022:i:c:s0960077922004015 DOI: 10.1016/j.chaos.2022.112191 Access Statistics for this article Chaos, Solitons & Fractals is currently edited by Stefano Boccaletti and Stelios Bekiros More articles in Chaos, Solitons & Fractals from Elsevier |
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