Remarks on the economic interpretation of Hopf bifurcations

1999

Abstract The Hopf bifurcation theorem has become a frequently used tool in the study of nonlinear dynamical economic systems. In this paper, it is shown that phenomena like multiple limit cycles, hysteresis loops and catastrophic transitions may possibly accompany a Hopf bifurcation. The theoretical argument is illustrated in Foley's liquidity cost–business cycle model.