Studies of non-linear cobweb models have failed to address a fundamental issue: whether the complex dynamicalbehaviordisplayedbysuchmodelsisconsistentwiththesurvivalofproducers.Thispapershows that where borrowing is unconstrained, as is implicitly assumed in standard cobweb models, borrowing results in financial crises. Incorporating constraints on borrowing is needed to salvage cobweb models. Industryperformance(intermsbothofprofitabilityandoftheincidenceofbankruptcies)ishighlysensitive tothenatureofsuchcreditrestrictions. © 2007ElsevierB.V.All rightsreserved.

The cobweb, borrowing and financial crises / Commendatore, Pasquale; Currie, M.. - In: JOURNAL OF ECONOMIC BEHAVIOR & ORGANIZATION. - ISSN 0167-2681. - STAMPA. - 66:3-4(2008), pp. 625-640. [10.1016/j.jebo.2006.05.008]

The cobweb, borrowing and financial crises

COMMENDATORE, PASQUALE;
2008

Abstract

Studies of non-linear cobweb models have failed to address a fundamental issue: whether the complex dynamicalbehaviordisplayedbysuchmodelsisconsistentwiththesurvivalofproducers.Thispapershows that where borrowing is unconstrained, as is implicitly assumed in standard cobweb models, borrowing results in financial crises. Incorporating constraints on borrowing is needed to salvage cobweb models. Industryperformance(intermsbothofprofitabilityandoftheincidenceofbankruptcies)ishighlysensitive tothenatureofsuchcreditrestrictions. © 2007ElsevierB.V.All rightsreserved.
2008
The cobweb, borrowing and financial crises / Commendatore, Pasquale; Currie, M.. - In: JOURNAL OF ECONOMIC BEHAVIOR & ORGANIZATION. - ISSN 0167-2681. - STAMPA. - 66:3-4(2008), pp. 625-640. [10.1016/j.jebo.2006.05.008]
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11588/101237
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