Increasing Returns to Scale and Nonlinear Endogenous Fluctuations in a Simple Overlapping Generations Models: A Pedagogical Note

We study the role of increasing returns (in production) on the emergence of nonlinear endogenous fluctuations in a simple overlapping generations model. We specify conditions for the occurrence of local flip and Hopf bifurcations in terms of relevant parameters. We, also, present orbits exhibiting endogenous fluctuations, for some numerical examples. Our results, in compliance with other recent works, suggest that the environment in which endogenous fluctuations can emerge approaches those considered more plausible when there are increasing returns to scale.