Borrowing Constraints and Complex Dynamics in an OLG Framework

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

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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 con.guration 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: E32; E52; Borrowing constraints; Credit cycles; Complex dynamics; Monetary policy (search for similar items in EconPapers)
Date: 2009-08-07
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Published in Journal of Economic Behavior and Organization, 2009, 72 (2), pp.656. ⟨10.1016/j.jebo.2009.07.011⟩

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Journal Article: Borrowing constraints and complex dynamics in an OLG framework (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-00723003

DOI: 10.1016/j.jebo.2009.07.011

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