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Borrowing constraints and complex dynamics in an OLG framework

Tiziana Assenza, Anna Agliari (), Domenico Delli Gatti () and Emiliano Santoro ()

Journal of Economic Behavior & Organization, 2009, vol. 72, issue 2, 656-669

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.

Keywords: Borrowing; constraints; Credit; cycles; Complex; dynamics; Monetary; policy (search for similar items in EconPapers)
Date: 2009
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