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The Iterative Nature of a Class of Economic Dynamics

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  • Shilei Wang

    () (Universita Ca’ Foscari Venezia, Department of Economics, Venice, Italy)

Abstract

This work aims to demonstrate a rather specific “iterative nature” existing in a class of regular economic dynamics by revisiting two typical economic concepts as informative examples, viz., random utility and stochastic growth. We begin with a formal treatment of discrete dynamical system and its popular derivation, iterated function system, so that a solid foundation could be laid for our analysis of economic dynamics. Two economic systems afterwards are constructed to show how random utility function and stochastic growth in a classical economy could be essentially driven by some iterative elements. Besides, our analyses also implicitly show that a quite complex economic dynamics carrying substantial randomness could basically originate in some fairly simple dynamic principles.

Suggested Citation

  • Shilei Wang, 2015. "The Iterative Nature of a Class of Economic Dynamics," Czech Economic Review, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, vol. 9(3), pages 155-168, December.
  • Handle: RePEc:fau:aucocz:au2015_155
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    References listed on IDEAS

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    1. Richard H. Day, 1983. "The Emergence of Chaos from Classical Economic Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 98(2), pages 201-213.
    2. Richard H. Day, 1994. "Complex Economic Dynamics - Vol. 1: An Introduction to Dynamical Systems and Market Mechanisms," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262041413, November.
    3. Mitra, Tapan & Privileggi, Fabio, 2009. "On Lipschitz continuity of the iterated function system in a stochastic optimal growth model," Journal of Mathematical Economics, Elsevier, vol. 45(1-2), pages 185-198, January.
    4. Mordecai Ezekiel, 1938. "The Cobweb Theorem," The Quarterly Journal of Economics, Oxford University Press, vol. 52(2), pages 255-280.
    5. Boldrin, Michele & Montrucchio, Luigi, 1986. "On the indeterminacy of capital accumulation paths," Journal of Economic Theory, Elsevier, vol. 40(1), pages 26-39, October.
    6. Nicholas Kaldor, 1934. "A Classificatory Note on the Determinateness of Equilibrium," Review of Economic Studies, Oxford University Press, vol. 1(2), pages 122-136.
    7. Tapan Mitra & Luigi Montrucchio & Fabio Privileggi, 2003. "The nature of the steady state in models of optimal growth under uncertainty," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 23(1), pages 39-71, December.
    8. Nishimura, Kazuo, 1985. "Competitive equilibrium cycles," Journal of Economic Theory, Elsevier, vol. 35(2), pages 284-306, August.
    9. Manski, Charles F., 1975. "Maximum score estimation of the stochastic utility model of choice," Journal of Econometrics, Elsevier, vol. 3(3), pages 205-228, August.
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    More about this item

    Keywords

    Dynamical system; iterated function system; random utility function; stochastic growth; chaos;

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • D99 - Microeconomics - - Micro-Based Behavioral Economics - - - Other

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