Homoclinic Bifurcation and Endogenous Cycles in the Dynamic IS-LM Model
Pages 242-250
Giovanni Bella

DOI: http://dx.doi.org/10.6000/1929-7092.2015.04.24

Published: 14 December 2015

Abstract: This paper contributes to the new keynesian literature by showing that stable endogenous cycles can emerge as equilibrium solutions of the traditional IS-LM model. The application of the original Bogdanov-Takens theorem allows us to determine the regions of the parametric space where the model exhibits a global indeterminate solution, and a low-growth trapping region, characterized by a continuum of equilibrium trajectories in the proximity of a homoclinic bifurcation.