Habit formation and chaotic dynamics in an n-dimensional cash-in-advance economy

Hung Ju Chen*, Ming-Chia Li

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

3 Scopus citations

Abstract

This paper investigates the global dynamics of an n-dimensional cash-in-advance model where external habits persist for n periods. We find that habit formation is an important determinant to the dynamic property of the economy and identifies conditions generating entropic chaos. Our results indicate that the possibility of chaotic motion increases with the depreciation rate of habits.

Original languageEnglish
Pages (from-to)49-62
Number of pages14
JournalNonlinear Dynamics
Volume58
Issue number1-2
DOIs
StatePublished - 1 Oct 2009

Keywords

  • Cash-in-advance economy
  • Chaos
  • Persistent habit

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