The Cobweb Model; Its Instability and the Onset of Chaos

Abstract

In chapters three, four and five we have seen various examples of limit cycle motion in dynamic economic models. However as we pointed out in section 2.7 limit cycles are not the only type of oscillatory motion which can arise in dynamical systems. For differential equation models of dimension three or greater chaotic motion is possible and indeed is more likely to be the norm. In the last chapter we speculated that as the time lag increases the limit cycle motion of the Goodwin model would evolve into chaotic motion, probably via the process of period doubling.