Endogenous Cycles, Debt and Monetary Policy
Piero Ferri () and
Anna Maria Variato ()
No 703, Working Papers (-2012) from University of Bergamo, Department of Economics
The paper discusses the dynamic properties of a macro model with an investment function based upon both real and financial aspects and a labor market ruled by imperfect competition. The model is then enriched by a monetary policy rule and by agents who forecast according to a time series strategy based upon a Markov process. Simulations show the persistence of oscillations even in the presence of the Taylor rule. The relevance of such financial aspects as cash flows and debts can create a trade-off between the control of inflation and the cyclicality of the economy. Furthermore, instability and debt-deflation phenomena can arise.
Keywords: endogenous cycles; monetary policy; learning (search for similar items in EconPapers)
JEL-codes: E32 E37 E52 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
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Persistent link: https://EconPapers.repec.org/RePEc:brg:wpaper:0703
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