Homoclinic and Heteroclinic Bifurcations in an Overlapping Generations Model with Credit Market Imperfection

Anna Agliari, George Vachadze

Research output: Contribution to journalArticlepeer-review

8 Citations (Scopus)

Abstract

We analyze a nonlinear OLG model with credit market imperfection and endogenous labor supply. When the investors’ protection is perfect, the model reduces to the standard one sector growth model proposed by Reichlin (JET 40:89–102, 1986), while the model reduces to the one studied by Matsuyama (Econometrica 72:853–884, 2004) when the agents’ labor supply is exogenous. Our goal is to highlight that the local analysis of the perfect foresight equilibrium may lead to misleading conclusions because the local analysis neglects the occurrence of different global bifurcation scenarios. In particular, the existence of a heteroclinic connection or the occurrence of a homoclinic bifurcation may be associated with global indeterminacy even when all steady states are locally determinate.
Original languageEnglish
Pages (from-to)241-260
Number of pages20
JournalComputational Economics
Volume38
DOIs
Publication statusPublished - 2011

Keywords

  • Credit market imperfection
  • Elastic labor supply
  • Endogenous fluctuations
  • Homoclinic and heteroclinic bifurcations

Fingerprint

Dive into the research topics of 'Homoclinic and Heteroclinic Bifurcations in an Overlapping Generations Model with Credit Market Imperfection'. Together they form a unique fingerprint.

Cite this