The cobweb, borrowing and financial crises

Journal article | Zeitschriftenartikel

Studies of non-linear cobweb models have failed to address a fundamental issue: whether the complex dynamical behavior displayed by such models is consistent with the survival of producers. This paper shows 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. Industry performance (in terms both of profitability and of the incidence of bankruptcies) is highly sensitive to the nature of such credit restrictions.

Object Details

• Extent: Seite(n): 625-640
• Language: Englisch
• Notes: Status: Postprint; begutachtet (peer reviewed)

References and Relationships

• Bibliographic citation: Journal of Economic Behavior & Organization, 66(3-4)

Classification and Topics

• Subject: Wirtschaft ; Volkswirtschaftslehre

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Commendatore, Pasquale ; Currie, Martin
• Event: Veröffentlichung
• (where): Niederlande
• (when): 2008

Further information

• DOI: https://doi.org/10.1016/j.jebo.2006.05.008
• URN: urn:nbn:de:0168-ssoar-248076
• Rights: GESIS - Leibniz-Institut für Sozialwissenschaften. Bibliothek Köln
• Last update: 21.06.2024, 4:27 PM CEST