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Optimal cyclicity and chaos in the 2-sector RSS model: An anything-goes construction

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  • Ali Khan, M.
  • Piazza, Adriana

Abstract

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.

Suggested Citation

  • Ali Khan, M. & Piazza, Adriana, 2011. "Optimal cyclicity and chaos in the 2-sector RSS model: An anything-goes construction," Journal of Economic Behavior & Organization, Elsevier, vol. 80(3), pages 397-417.
  • Handle: RePEc:eee:jeborg:v:80:y:2011:i:3:p:397-417
    DOI: 10.1016/j.jebo.2011.04.004
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    1. repec:eee:mateco:v:74:y:2018:i:c:p:46-55 is not listed on IDEAS

    More about this item

    Keywords

    2-Sector RSS model; Optimal program; Continuous policy functions; Trapping square; Li–Yorke theorem; Sharkovsky’s theorem; Entropy; Turbulence; Golden number; Catalan numbers;

    JEL classification:

    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • O21 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Planning Models; Planning Policy

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