Chaos in economic models with exogenous shocks

Date

2014-10-01

Author

Akhmet, Marat
Akhmetova, Zhanar
Fen, Mehmet Onur

Metadata

Show full item record

This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

Item Usage Stats

2
views

0
downloads

We investigate the generation of chaos in economic models through exogenous shocks. The perturbation is formulated as a pulse function where either values or instants of discontinuity are chaotically behaved. We provide a rigorous proof of the existence of chaos in the perturbed model. The analytical results are applied to Kaldor-Kalecki-type models of the aggregate economy subject to export and rainfall shocks, respectively. Simulations are used to demonstrate the emergence and the control of chaos. Our results shed light on a novel source of chaos in economic models and have important implications for policy-making.

Subject Keywords

Economics and Econometrics, Organizational Behavior and Human Resource Management

URI

https://hdl.handle.net/11511/39199

Collections

Department of Mathematics, Article