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Impact of Financial Crisis on Economic Growth: A Stochastic Model

Author

Listed:
  • Tadmon Calvin

    (Department of Mathematics and Computer Science, Faculty of Science, University of Dschang, P.O Box 67 Dschang, Cameroon)

  • Njike Tchaptchet Eric Rostand

    (Department of Mathematics and Computer Science, Faculty of Science, University of Dschang, P.O Box 67 Dschang, Cameroon)

Abstract

In this paper, we develop a stochastic model to analyze how financial contagion may affect economic activity. In the deterministic case, we show that, according to specific parameter values, the economy may converge either to a stress-free equilibrium or to a stressed equilibrium: in the former situation, the level of economic growth is maximal, while in the latter, it is reduced by financial contagion. In the stochastic case, we compute a value around which the level of economic growth oscillates. Numerical simulations are performed to illustrate theoretical results obtained.

Suggested Citation

  • Tadmon Calvin & Njike Tchaptchet Eric Rostand, 2022. "Impact of Financial Crisis on Economic Growth: A Stochastic Model," Stochastics and Quality Control, De Gruyter, vol. 37(1), pages 45-63, June.
    • Handle: RePEc:bpj:ecqcon:v:37:y:2022:i:1:p:45-63:n:7
    DOI: 10.1515/eqc-2021-0049
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    Cited by:

    1. Mingli Xia & Linna Liu & Jianyin Fang & Yicheng Zhang, 2023. "Stability Analysis for a Class of Stochastic Differential Equations with Impulses," Mathematics, MDPI, vol. 11(6), pages 1-10, March.

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