Borrowing Constraints and Complex Dynamics in an OLG Framework

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

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.

Mots clés: E32; E52; Borrowing constraints; Credit cycles; Complex dynamics; Monetary policy

Domaines: Économie et finance quantitative [q-fin]

Tiziana Assenza, Anna Agliari, Domenico Delli Gatti, Emiliano Santoro. Borrowing Constraints and Complex Dynamics in an OLG Framework. Journal of Economic Behavior and Organization, 2009, 72 (2), pp.656. ⟨10.1016/j.jebo.2009.07.011⟩. ⟨hal-00723003⟩