Serena Sordi
DEPS, USiena
Marwil J. Dávila-Fernández
DEPS, USiena
Abstract
We develop a simple behavioural macrodynamic model in continuous-time with the purpose of investigating the interaction of the real economy and the financial markets. Building on Westerfhoff (2012), we improve the speci cation of aggregate demand by distinguishing between consumption and investment expenditure and assuming that the latter is determined by the flexible accelerator principle. We remove the ad-hoc nonlinearity in the fundamentalist behavioural rule and allow the composition of the population between chartists and fundamentalists to be endogenously determined. The resulting nonlinear dynamic systems are shown to generate various dynamic regimes, among which the coexistence of periodic attractors with interesting economic implications.
Keywords
Real-fi nancial interaction, multiplier, nonlinear accelerator, heterogenous speculators, complex dynamics.
Jel Codes
E12, E24, E32, E44.
