Can business cycles arise in a two-regional model with fixed exchange rates?

Abstract

The two-regional five dimensional model describing the development of income, capital stock and money
stock, which was introduced by T.~Asada in \cite{asada} 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. Theorem on the existence of business cycles is presented.