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Nonlinear And Complex Dynamics In Economics

  • William Barnett

    (Department of Economics, The University of Kansas)

  • Alfredo Medio

    (Department of Economics, The University of Venice)

  • Apostolos Serletis

    (Department of Economics, The University of Calgary)

This paper is an up-to-date survey of the state-of-the-art in dynamical systems theory relevant to high levels of dynamical complexity, characterizing chaos and near chaos, as commonly found in the physical sciences. The paper also surveys applications in economics and finance. This survey does not include bifurcation analyses at lower levels of dynamical complexity, such as Hopf and transcritical bifurcations, which arise closer to the stable region of the parameter space. We discuss the geometric approach (based on the theory of differential/difference equations) to dynamical systems and make the basic notions of complexity, chaos, and other related concepts precise, having in mind their (actual or potential) applications to economically motivated questions. We also introduce specific applications in microeconomics, macroeconomics, and finance, and discuss the policy relevancy of chaos.

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File URL: http://www2.ku.edu/~kuwpaper/2009Papers/201223.pdf
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Paper provided by University of Kansas, Department of Economics in its series WORKING PAPERS SERIES IN THEORETICAL AND APPLIED ECONOMICS with number 201223.

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Length: 82 pages
Date of creation: Sep 2012
Date of revision: Sep 2012
Handle: RePEc:kan:wpaper:201223
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