Complex Dynamics and Inflation Volatility: An Overlapping Generations Approach

Saladin Mohamed

MPRA Paper from University Library of Munich, Germany

Abstract: \noindent This paper demonstrates how a purely random central bank policy generates endogenous economic fluctuations in an overlapping generations (OLG) model. By pivoting from traditional physical stores of value (like capital or renewable resources) to nominal fiat money, we explore how a completely random, noisy central bank money supply affects precautionary savings, inflation volatility, and macroeconomic stability. We find that the economy's stability depends entirely on the intertemporal elasticity of substitution, echoing the mathematical mechanics of earlier resource-based models, and proving that monetary unpredictability is a systemic distortion rather than neutral noise.

Keywords: Complex Dynamics; Inflation Volatility; Overlapping Generations Approach} (search for similar items in EconPapers)
JEL-codes: E5 (search for similar items in EconPapers)
Date: 2026-04-02
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