Regional business cycle synchronization through expectations

This paper provides an example in which regional business cycles may synchronize via producers’ expectations, even though there is no interregional trade, by means of a system of globally coupled, noninvertible maps. We concentrate on the dependence of the dynamics on a parameter η which denotes the inverse of price elasticity of demand. Simulation results show that several phases (the short transient, the complete asynchronous, the long transient and the intermediate transient) appear one after another as η increases. In the long transient phase, the intermittent clustering process with a long chaotic transient appears repeatedly.