On the existence of business cycles in Asada’s two-regional model

A two-regional five-dimensional model describing the development of income, capital stock and money stock, which was introduced by Asada (2004) [2] is analysed. Sufficient conditions for the existence of one pair of purely imaginary eigenvalues and three eigenvalues with negative real parts in the linear approximation matrix of the model are found. Formulae for the calculation of the bifurcation coefficients of the model are derived. The theorem on the existence of business cycles is presented. A numerical example illustrating the gained results is given.