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Financial Fragility and Economic Fluctuations: Numerical Simulations and Policy Implications

Serena Sordi () and Alessandro Vercelli

Department of Economics University of Siena from Department of Economics, University of Siena

Abstract: This paper proposes a simple prototype model that describes the complex dynamics of a sophisticated monetary economy. The interaction between the current and intertemporal financial constraints of economic units brings about irregular fluctuations at the micro and macro levels. By means of qualitative dynamic analysis and numerical simulations, we reformulate in more operational terms, and extend in a number of new directions, the model suggested recently by one of the authors (Vercelli, 2000) to study the interaction between financial fragility, modelled in terms of structural instability, and dynamically unstable financial fluctuations.

Keywords: Complex dynamics, Structural instability; Financial fragility; Economic fluctuations; Numerical simulations (search for similar items in EconPapers)
JEL-codes: B41 E12 E32 E52 (search for similar items in EconPapers)
Date: 2003-10
New Economics Papers: this item is included in nep-cmp, nep-mfd and nep-rmg
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Persistent link: https://EconPapers.repec.org/RePEc:usi:wpaper:407

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