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 configuration 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.
|Number of pages||14|
|Journal||JOURNAL OF ECONOMIC BEHAVIOR & ORGANIZATION|
|Publication status||Published - 2009|
- Borrowing constraints
- Complex dynamics
- Credit cycles
- Monetary policy