Bifurcation Structure in a Model of Monetary Dynamics with Two Kink Points

Anna Agliari, Laura Gardini, Iryna Sushko

Research output: Chapter in Book/Report/Conference proceedingChapter

1 Citation (Scopus)


In the present paper we consider the discrete version of the Sargent & Wallace (Econometrica 41:1043–8, 1973) model with perfect foresight. We assume a piecewise linear money demand function, decreasing over a ‘normal’ range (−aR,aL) and constant when the expected inflation rate is beyond these bounds. In this way we obtain that the monetary dynamics are described by a one-dimensional map having two kink points. We show that when the slope of the money demand function (μ) is sufficiently large in absolute value and the speed of adjustment of the price to the market disequilibrium (α) is smaller than 1 either cycles of any period or chaotic dynamics may be generated by the model. The description of the bifurcation structure of the (α,μ) parameter plane is given.
Original languageEnglish
Title of host publicationNonlinear Economic Dynamics and Financial Modelling
Number of pages17
Publication statusPublished - 2014


  • Bifurcation structure
  • Monetary Dynamics
  • Piecewise map


Dive into the research topics of 'Bifurcation Structure in a Model of Monetary Dynamics with Two Kink Points'. Together they form a unique fingerprint.

Cite this