Optimal cyclicity and chaos in the 2-sector RSS model: An anything-goes construction
We present a simple and transparent construction that furnishes, for any pre-chosen dynamic, particular instances of the 2-sector version of the Robinson–Solow–Srinivasan model that yield the chosen dynamic, including optimal topologically chaotic programs and those that exhibit cycles of any given period. The construction is expressed in terms of ξ, the marginal rate of transformation of capital from one period to the next with zero consumption, an important summary statistic of the model discovered by Khan and Mitra. Our construction relies on theorems due to Li–Yorke and Sharkovsky, and complements earlier work on chaotic dynamics in the RSS model.
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