The dynamics of the NAIRU model with two switching regimes

Fabio Tramontana, Laura Gardini () and Piero Ferri ()
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Piero Ferri: Department of Economics, University of Bergamo, Italy

No 1004, Working Papers from University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini

Abstract: We consider a model of inflation and unemployment proposed in Ferri et al. (JEBO, 2001), in which the dynamics are described by a discontinuous piecewise linear map, made up of two branches. We shall show that the bounded dynamics may be classified in two cases: we may have either regular dynamics with stable cycles of any period or quasiperiodic trajectories, or only chaotic dynamics (pure chaos in which a unique absolutely continuous invariant ergodic measure exists, and structurally stable),in a rich variety of cyclical chaotic intervals. The main results are the analytical formulation of the border collision bifurcation curves, through which we give a complete picture of the possible outcomes of the model.

Keywords: Phillips curve; Regime switching; NAIRU; Nonlinearities; Discontinuous maps. (search for similar items in EconPapers)
JEL-codes: C62 E31 E32 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2010, Revised 2010
New Economics Papers: this item is included in nep-mac
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Citations: View citations in EconPapers (13)

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http://www.econ.uniurb.it/RePEc/urb/wpaper/WP_10_04.pdf First version, 2010 (application/pdf)

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Journal Article: The dynamics of the NAIRU model with two switching regimes (2010)
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