Fluctuations in a mixed IS-LM business cycle model

Abstract

In the present paper, we extend a delayed IS-LM business cycle model by introducing an additional advance (anticipated capital stock) in the investment function. The resulting model is represented in terms of mixed differential equations. For the deviating argument $au$ (advance and delay) being a bifurcation parameter we investigate the local stability and the local Hopf bifurcation. Also some numerical simulations are given to support the theoretical analysis.

Keywords

• IS-LM business cycle
• mixed differential equations
• Hopf bifurcation
• periodic solutions