This paper uses a dynamic general equilibrium model to examine whether financial innovations destabilize an economy. Applying a neoclassical production function, we demonstrate that as financial frictions are mitigated, the economy loses stability and a ip bifurcation occurs at a certain level...

It is sometimes pointed out that economic research is prone to move in cycles and react to particular events such as crises and recessions. The present paper analyses this issue through a quantitative analysis by answering two closely related research questions: (1) whether or not there are...