Computing Economic Chaos

Authors:
Richard H. Day;Oleg V. Pavlov
Affiliations:
Department of Economics, University of Southern California, Los Angeles, CA 90089-0253, U.S.A.;Information Systems Department, School of Management, Boston University, Boston, MA 02215, U.S.A.
Venue:
Computational Economics
Year:
2004

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Abstract

Existence theory in economics is usually in real domains such as the findingsof chaotic trajectories in models of economic growth, tâtonnement, oroverlapping generations models. Computational examples, however, sometimesconverge rapidly to cyclic orbits when in theory they should be nonperiodicalmost surely. We explain this anomaly as the result of digital approximationand conclude that both theoretical and numerical behavior can still illuminateessential features of the real data.