Quotation Kubin, Ingrid, Gardini, Laura. 2013. Border collision bifurcations in boom and bust cycles. Journal of Evolutionary Economics 23 (4): 811-829.




Boom and bust cycles are widely documented in the literature on industry dynamics. Rigidities and delays in capacity adjustment in combination with bounded rational behavior have been identified as central driving forces.We construct a model that features only these two elements and we show that this is indeed sufficient to reproduce some stylized facts of a boom and bust cycle. The bifurcation diagrams summarizing the dynamic behavior reveal complex cycles and in particular also abrupt changes in the nature of these cycles. We apply new insights from the mathematical theory of piecewise smooth dynamic systems - in particular, results from the theory of border collision bifurcations - and show that the very existence of borders such as capacity constraints or nonnegativity constraints may lie behind abrupt changes in the dynamic behavior of economic variables.


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Publication's profile

Status of publication Published
Affiliation WU
Type of publication Journal article
Journal Journal of Evolutionary Economics
Citation Index SSCI
WU Journalrating 2009 A
WU-Journal-Rating new VW-D
Language English
Title Border collision bifurcations in boom and bust cycles
Volume 23
Number 4
Year 2013
Page from 811
Page to 829


COST Action IS1104: The EU in the new economic complex geography
Kubin, Ingrid (Details)
Gardini, Laura (Department of Economics, Society and Politics, University of Urbino, Urbino, Italy)
Department of Economics (Kubin) (Details)
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