A piecewise linear model of credit traps and credit cycles: a complete characterization

Kiminori Matsuyama, Iryna Sushko () and Laura Gardini ()
Additional contact information
Iryna Sushko: Kyiv School of Economics

Decisions in Economics and Finance, 2018, vol. 41, issue 2, No 2, 119-143

Abstract: Abstract We reconsider a regime-switching model of credit frictions which has been proposed in a general framework by Matsuyama for the case of Cobb–Douglas production functions. This results in a piecewise linear map with two discontinuity points and all three branches having the same slope. We offer a complete characterization of the bifurcation structure in the parameter space, as well as of the attracting sets and related basins of attraction in the phase space. We also discuss parameter regions associated with overshooting, leapfrogging, poverty traps, reversal of fortune and growth miracle, as well as cycles with any kind of switching between the expansionary and contractionary phases.

Keywords: Macroeconomic model of credit frictions; Poverty traps; Growth miracle; One-dimensional piecewise linear map; Border collision bifurcation (search for similar items in EconPapers)
JEL-codes: C61 E22 E44 O33 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://link.springer.com/10.1007/s10203-018-0220-5 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:decfin:v:41:y:2018:i:2:d:10.1007_s10203-018-0220-5

Ordering information: This journal article can be ordered from
http://www.springer. ... ry/journal/10203/PS2

DOI: 10.1007/s10203-018-0220-5

Access Statistics for this article

Decisions in Economics and Finance is currently edited by Paolo Ghirardato

More articles in Decisions in Economics and Finance from Springer, Associazione per la Matematica
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().