Chaotic dynamics in economic models. Some simple case-studies.

*(English. Dutch summary)*Zbl 0778.90006
Groningen Theses in Economics, Management & Organization. Groningen: Wolters-Noordhoff. Groningen: Rijksuniversiteit Groningen, ix, 286 p. (1991).

This research monograph was written as a doctoral thesis in economics at the University of Groningen, The Netherlands, and addresses a subject that has attracted some research interest recently. The book deals with the problem of providing an endogenous explanation for business cycles, using nonlinear economic modelling. The purpose is to show that (even) simple economic models, such as the cobweb model and Hick’s trade cycle model, can exhibit chaotic dynamics.

There are four chapters, written independently of each other. Thus, each chapter is self-contained, consisting of an introduction, a study of the particular model and a conclusion. This inevitably leads to some repetition.

The first chapter deals with the cobweb model under adaptive expectations, the second with a simple piecewise linear, non-Walrasian macro model as well as a two-market economy where producers hold inventories. The third chapter studies Hicksian cycles and chaos in a centrally planned economy, and the fourth and last deals with one of the first nonlinear business cycle models, Hick’s nonlinear trade cycle model. All dynamical models are cast in discrete time. In each model, the following basic questions are addressed: is chaotic behavior possible and in what way do the dynamics depend on the values of the model parameters?

There are four chapters, written independently of each other. Thus, each chapter is self-contained, consisting of an introduction, a study of the particular model and a conclusion. This inevitably leads to some repetition.

The first chapter deals with the cobweb model under adaptive expectations, the second with a simple piecewise linear, non-Walrasian macro model as well as a two-market economy where producers hold inventories. The third chapter studies Hicksian cycles and chaos in a centrally planned economy, and the fourth and last deals with one of the first nonlinear business cycle models, Hick’s nonlinear trade cycle model. All dynamical models are cast in discrete time. In each model, the following basic questions are addressed: is chaotic behavior possible and in what way do the dynamics depend on the values of the model parameters?

Reviewer: S.Jørgensen (Odense)