Chaotic Dynamics in Discrete-Time Economic Models

Abstract

The presentation of nonlinear dynamical systems in the preceding two chapters uncovered a variety of mathematical concepts which allow one to establish endogenous oscillations in economic applications. In these models, cyclical behavior can prevail for large ranges of the parameters while persistent oscillations in linear dynamical systems usually occur only for a particular parameter constellation. It seems natural, therefore, to refer to nonlinear approaches when cyclical motion is to be modeled in economics. In other words, cyclical behavior is synonymous with the presence of nonlinearities in most cases.