Nonlinear and Complex Dynamics in Economics

Barnett, William A. and Serletis, Apostolos and Serletis, Demitre (2012): Nonlinear and Complex Dynamics in Economics.

Abstract

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 specifi�c applications in microeconomics, macroeconomics, and �finance, and discuss the policy relevancy of chaos.

• Item Type: MPRA Paper
• Language: English
• Keywords: Complexity; chaos; endogenous business cycles
• Subjects: C - Mathematical and Quantitative Methods > C5 - Econometric Modeling > C51 - Model Construction and Estimation; C - Mathematical and Quantitative Methods > C1 - Econometric and Statistical Methods and Methodology: General > C13 - Estimation: General; C - Mathematical and Quantitative Methods > C3 - Multiple or Simultaneous Equation Models ; Multiple Variables > C30 - General; C - Mathematical and Quantitative Methods > C6 - Mathematical Methods ; Programming Models ; Mathematical and Simulation Modeling > C61 - Optimization Techniques ; Programming Models ; Dynamic Analysis

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