Abstract
A new literature in the 1980s studied the possibility that endogenous cycles and irregular chaotic dynamics resembling stochastic fluctuations could be generated by deterministic, equilibrium models of the economy, in particular in overlapping generations models and in models with infinitely lived representative agents. Other empirical studies attempted to identify whether various economic time series were generated by deterministic chaotic dynamics or stochastic fluctuations. While dynamic equilibrium models calibrated to standard parameter values can generate chaotic dynamics and endogenous cycles even under intertemporal arbitrage and without market frictions, definitive empirical evidence for chaos in economics has not yet been produced.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Bibliography
Benhabib, J., and R. Day. 1980. Erratic accumulation. Economic Letters 6: 113–117.
Benhabib, J., and R. Day. 1982. A characterization of erratic dynamics in the overlapping generations model. Journal of Economic Dynamics and Control 4: 37–55.
Benhabib, J., and K. Nishimura. 1979. The Hopf bifurcation and the existence and stability of closed orbits in multisector models of optimal economic growth. Journal of Economic Theory 21: 421–444.
Benhabib, J., and A. Rustichini. 1990. Equilibrium cycling with small discounting. Journal of Economic Theory 52: 423–432.
Benhabib, J., S. Schmitt-Grohe, and M. Uribe. 2002. Chaotic interest rate rules. American Economic Review Papers and Proceedings 92: 72–78.
Boldrin, M., and L. Montrucchio. 1986. On the indeterminacy of capital accumulation paths. Journal of Economic Theory 40: 24–39.
Brock, W. 1986. Distinguishing random and deterministic systems. Journal of Economic Theory 40: 68–195.
Brock, W., W. Dechert, B. LeBaron, and J. Scheinkman. 1996. A test for independence based upon the correlation dimension. Econometric Reviews 15: 197–235.
Diamond, P. 1976. Chaotic behavior of systems of difference equations. International Journal of Systems Science 7: 953–956.
Eckmann, J.-P., and D. Ruelle. 1985. Ergodic theory of chaos and strange attractors. Review of Modern Physics 57: 617–656.
Frisch, R. 1933. Propagation problems and impulse problems in dynamic economics. In Economic essays in honor of Gustav Cassel. London: Allen and Unwin. Reprinted in Readings in business cycles, ed. R. Gordon and L. Klein. Homewood: Richard D. Irwin, 1965.
Grandmont, J. 1985. On endogenous competitive business cycles. Econometrica 53: 995–1045.
Li, T., and J. Yorke. 1975. Period three implies chaos. American Mathematical Monthly 82: 985–992.
Marotto, F. 2005. On redefining a snap-back repeller. Chaos, Solitons and Fractals 25: 25–28.
Mitra, T. 1996. An exact discount factor restriction for period three cycles in dynamic optimization models. Journal of Economic Theory 69: 281–305.
Nishimura, K., and M. Yano. 1996. On the least upper bound of discount factors that are compatible with optimal period-three cycles. Journal of Economic Theory 69: 306–333.
Sakai, H., and H. Tokumaru. 1980. Autocorrelations of a certain chaos. IEEE Transactions in Acoustic Speech Signal Process 28: 588–590.
Samuelson, P. 1939. Interactions between the multiplier analysis and the principle of acceleration. Review of Economic Statistics 21: 75–78.
Sarkovskii, A. 1964. Coexistence of cycles of a continuous map of the line into itself. Ukrains’kyi Matematychnyi Zhurnal 16: 61–71.
Sorger, G. 1992. On the minimum rate of impatience for complicated optimal growth paths. Journal of Economic Theory 56: 160–179.
Author information
Authors and Affiliations
Editor information
Copyright information
© 2018 Macmillan Publishers Ltd.
About this entry
Cite this entry
Benhabib, J. (2018). Chaotic Dynamics in Economics. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95189-5_2190
Download citation
DOI: https://doi.org/10.1057/978-1-349-95189-5_2190
Published:
Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-1-349-95188-8
Online ISBN: 978-1-349-95189-5
eBook Packages: Economics and FinanceReference Module Humanities and Social SciencesReference Module Business, Economics and Social Sciences