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Dynamic Investigations of an Endogenous Business Cycle Model with Heterogeneous Agents

Author

Listed:
  • Spiros Bougheas

    (University of Nottingham)

  • Pasquale Commendatore

    (University of Naples, Federico II
    National Research Council - Institute for Studies on the Mediterannean (Ismed-CNR))

  • Laura Gardini

    (University of Urbino Carlo Bo)

  • Ingrid Kubin

    (Vienna University of Economics and Business)

Abstract

We introduce agents’ heterogeneity into a model of endogenous business cycles, in which agents can invest either in ‘good’ projects that contribute to future capital formation, or in ‘bad’ projects without that property. The resulting map involves three distinct regimes, two of which we linearize. Using theoretical results on piecewise linear systems and on border collision bifurcations, we are able to provide a thourough analysis of the dynamics.

Suggested Citation

  • Spiros Bougheas & Pasquale Commendatore & Laura Gardini & Ingrid Kubin, 2025. "Dynamic Investigations of an Endogenous Business Cycle Model with Heterogeneous Agents," Computational Economics, Springer;Society for Computational Economics, vol. 65(2), pages 665-689, February.
    • Handle: RePEc:kap:compec:v:65:y:2025:i:2:d:10.1007_s10614-023-10492-2
    DOI: 10.1007/s10614-023-10492-2
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    References listed on IDEAS

    as
    1. Kubin, Ingrid & Zörner, Thomas O., 2021. "Credit cycles, human capital and the distribution of income," Journal of Economic Behavior & Organization, Elsevier, vol. 183(C), pages 954-975.
    2. Sushko, Iryna & Agliari, Anna & Gardini, Laura, 2006. "Bifurcation structure of parameter plane for a family of unimodal piecewise smooth maps: Border-collision bifurcation curves," Chaos, Solitons & Fractals, Elsevier, vol. 29(3), pages 756-770.
    3. Spiros Bougheas & Pasquale Commendatore & Laura Gardini & Ingrid Kubin, 2022. "Financial Development, Cycles and Income Inequality in a Model with Good and Bad Projects," National Institute of Economic and Social Research (NIESR) Discussion Papers 545, National Institute of Economic and Social Research.
    4. ,, 2013. "The good, the bad, and the ugly: An inquiry into the causes and nature of credit cycles," Theoretical Economics, Econometric Society, vol. 8(3), September.
    5. Kubin, Ingrid & Zörner, Thomas O. & Gardini, Laura & Commendatore, Pasquale, 2019. "A credit cycle model with market sentiments," Structural Change and Economic Dynamics, Elsevier, vol. 50(C), pages 159-174.
    6. Matsuyama, Kiminori & Sushko, Iryna & Gardini, Laura, 2016. "Revisiting the model of credit cycles with Good and Bad projects," Journal of Economic Theory, Elsevier, vol. 163(C), pages 525-556.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Business cycles; Heterogeneous agents; Piecewise linear systems; Bifurcations;
    All these keywords.

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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