Credit market imperfection, financial market globalization, and catastrophic transition

Anna Agliari (), Francesco Rillosi and George Vachadze

Mathematics and Computers in Simulation (MATCOM), 2015, vol. 108, issue C, 41-62

Abstract: We analyze a two-country overlapping generations model with integrated financial markets. We assume heterogeneous countries with respect to the population size, to the technology and to the level of credit market imperfection. We show that a subcritical Neimark–Sacker bifurcation may occur and that, before its destabilization, a stable steady state coexists with two invariant closed curves – one attracting and one repelling. In this way we reinforce existing results on the implications of the credit market imperfection that not only causes amplification and persistence of macroeconomic shocks, but also leads to significant changes in the long run behavior of the economy (i.e., catastrophic transition).

Keywords: Catastrophic transition; Crater bifurcation; Credit market imperfection; Financial globalization (search for similar items in EconPapers)
JEL-codes: E32 E44 F34 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:matcom:v:108:y:2015:i:c:p:41-62

DOI: 10.1016/j.matcom.2014.05.009

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