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Nonlinearity and Chaos in Economic Models: Implications for Policy Decisions

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  • Bullard, James
  • Butler, Alison

Abstract

This survey paper discusses the policy implications that can be expected from the recent research on nonlinearity and chaos in economic models. Expected policy implications are interpreted as a driving force behind the recent proliferation of research in this area. In general, it appears that no new justification for policy intervention is developed in models of endogenous fluctuations, although this conclusion depends in part on the definition of equilibrium. When justified, however, policy tends to be very effective in these models. Copyright 1993 by Royal Economic Society.

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  • Bullard, James & Butler, Alison, 1993. "Nonlinearity and Chaos in Economic Models: Implications for Policy Decisions," Economic Journal, Royal Economic Society, vol. 103(419), pages 849-867, July.
    • Handle: RePEc:ecj:econjl:v:103:y:1993:i:419:p:849-67
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    1. Barnett, William A. & Serletis, Apostolos & Serletis, Demitre, 2015. "Nonlinear And Complex Dynamics In Economics," Macroeconomic Dynamics, Cambridge University Press, vol. 19(8), pages 1749-1779, December.
    2. Atanas Christev, 2006. "Learning Hyperinflations," Computing in Economics and Finance 2006 475, Society for Computational Economics.
    3. Orlando Gomes, 2008. "Imperfect Demand Expectations and Endogenous Business Cycles," Zagreb International Review of Economics and Business, Faculty of Economics and Business, University of Zagreb, vol. 11(1), pages 37-59, May.
    4. Alexeeva, Tatyana A. & Barnett, William A. & Kuznetsov, Nikolay V. & Mokaev, Timur N., 2020. "Dynamics of the Shapovalov mid-size firm model," Chaos, Solitons & Fractals, Elsevier, vol. 140(C).
    5. Kyrtsou, Catherine & Vorlow, Costas, 2009. "Modelling non-linear comovements between time series," Journal of Macroeconomics, Elsevier, vol. 31(1), pages 200-211, March.
    6. Gomes, Orlando, 2008. "Too much of a good thing: Endogenous business cycles generated by bounded technological progress," Economic Modelling, Elsevier, vol. 25(5), pages 933-945, September.
    7. Libo Xu & Apostolos Serletis, 2019. "Communication frictions, sentiments, and nonlinear business cycles," International Journal of Economic Theory, The International Society for Economic Theory, vol. 15(2), pages 137-152, June.
    8. Guo, Jang-Ting & Lansing, Kevin J., 2002. "Fiscal Policy, Increasing Returns, And Endogenous Fluctuations," Macroeconomic Dynamics, Cambridge University Press, vol. 6(5), pages 633-664, November.
    9. Orlando Gomes, 2007. "Routes to chaos in macroeconomic theory," Journal of Economic Studies, Emerald Group Publishing, vol. 33(6), pages 437-468, January.
    10. Andrei Kapaev, 2013. "Remark on repo and options," Papers 1311.5211, arXiv.org.
    11. Orlando Gomes, 2006. "Endogenous Business Cycles in the Ramsey Growth Model," Zagreb International Review of Economics and Business, Faculty of Economics and Business, University of Zagreb, vol. 9(2), pages 13-36, November.
    12. Orlando Gomes, 2006. "Routes to chaos in macroeconomic theory," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 33(6), pages 437-468, November.
    13. Orlando Gomes, 2006. "Routes to chaos in macroeconomic theory," Journal of Economic Studies, Emerald Group Publishing, vol. 33(6), pages 437-468, November.
    14. Garcia, Alfredo Daniel & Szybisz, Martin Andres, 2017. "Size effect in transitional dynamics of the banking network," MPRA Paper 80195, University Library of Munich, Germany.
    15. Franz Alberto Hamann, 1996. "Puede Explicarse el Precio Externo del Café con un Modelo Econométrico no Lineal?," Borradores de Economia 065, Banco de la Republica de Colombia.
    16. Vivaldo M. Mendes & Diana A. Mendes, 2006. "Active Interest Rate Rules and the Role of Stabilization Policy R&D Tax Credits," Working Papers Series 1 ercwp0208, ISCTE-IUL, Business Research Unit (BRU-IUL).
    17. Yang Hu & Guangping Hu, 2023. "Stabilization and Chaos Control of an Economic Model via a Time-Delayed Feedback Scheme," Mathematics, MDPI, vol. 11(13), pages 1-13, July.
    18. Juan Ricardo Perilla Jimenez, 2019. "Mainstream and evolutionary views of technology, economic growth and catching up," Journal of Evolutionary Economics, Springer, vol. 29(3), pages 823-852, July.
    19. Sorger, Gerhard, 1998. "Imperfect foresight and chaos: an example of a self-fulfilling mistake," Journal of Economic Behavior & Organization, Elsevier, vol. 33(3-4), pages 363-383, January.

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