Endogenous instability in credit-constrained emerging economies with Leontief technology
type: Item
instance of: scholarly article
title: Endogenous instability in credit-constrained emerging economies with Leontief technology
zbMATH Open document ID: 1151.91635
DOI: 10.1155/2008/196494
author: Cristiana Mammana
author: Elisabetta Michetti
published in: Discrete Dynamics in Nature and Society
publication date: 2008-10-16T00:00:00Z
full work available at URL: https://eudml.org/doc/129455
review text: Summary: This work provides a framework to analyze the role of financial development as a source of endogenous instability in emerging economies subject to moral hazard problems. We propose and study a dynamic model describing a small open economy with a tradeable good produced by internationally mobile capital and a country specific input, using Leontief technology. We demonstrate that emerging markets could be endogenously unstable since large capital inflows increase risk and exacerbate asymmetric information problems, according to empirical evidences. Using bifurcation and stability analysis, we describe the properties of the system attractors, we assess the plausibility for complex dynamics and, we find out that border collision bifurcations can emerge due to the fact that the state space is piecewise smooth. As a consequence, when a fixed or periodic point loses its stability, the final dynamics may become suddenly chaotic. This fact may explain how financial crises occurred in emerging economies.
Mathematics Subject Classification ID: 91B62
Mathematics Subject Classification ID: 91B64
Mathematics Subject Classification ID: 37G99
zbMATH DE Number: 5352076
Wikidata QID: Q58644448
MaRDI profile type: Publication
OpenAlex ID: W1981347955
cites work: Dualism and Macroeconomic Volatility
cites work: Chaotic dynamics in credit constrained emerging economies
cites work: BORDER-COLLISION BIFURCATIONS FOR PIECEWISE SMOOTH ONE-DIMENSIONAL MAPS
cites work: Period Three Implies Chaos
description: scientific article; zbMATH DE number 5352076