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Chaotic Dynamics and Bifurcation in a Macro Model

Staff Report 55 | Published July 1, 1980

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Author

Michael J. Stutzer Professor of Finance, University of Iowa

Chaotic Dynamics and Bifurcation in a Macro Model

Abstract

The qualitative dynamics of a discrete time version of a deterministic, continuous time, nonlinear macro model formulated by Haavelmo are fully characterized. Recently developed methods of symbolic dynamics and ergodic theory are shown to provide a simple, effective means of analyzing the behavior of the resulting one-parameter family of first-order, deterministic, nonlinear difference equations. A complex periodic and random “aperiodic” orbit structure dependent on a key structural parameter is present, which contrasts with the total absence of such complexity in Haavelmo’s continuous time version. Several implications for dynamic economic modelling are discussed.


Published in: _Journal of Economic Dynamics and Control_ (Vol. 2, 1980, pp. 353-376) https://doi.org/10.1016/0165-1889(80)90070-6.