Homoclinic Bifurcation and Endogenous Cycles in the Dynamic IS-LM Model

Authors

  • Giovanni Bella Department of Economics and Business, University of Cagliari

DOI:

https://doi.org/10.6000/1929-7092.2015.04.24

Keywords:

Multiple steady states, homoclinic bifurcation, oscillating solutions

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.

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Published

2015-12-14

Issue

Section

Special Issue - Hayek, Keynes and the Crisis: Analyses and Remedies. An Introduction