Discontinuities and catastrophes

Donald A. R. George

Chapter 8 in Mathematical Modelling for Economists, 1988, pp 135-158 from Palgrave Macmillan

Abstract: Abstract In Chapters 6 and 7 we discussed the jump variable of rational expectations theory and saw that they had a crucial role in rational expectations dynamics. It was also evident that the behaviour of these jump variables has very little theoretical underpinning. They are essentially ad hoc constructions necessary for modelling reasons. Observable economic variables do jump however; exchange rates furnish perhaps the most obvious example. In this chapter we examine a type of model which can be used to explain such jumps in a coherent way.

Keywords: Exchange Rate; Indifference Curve; Catastrophe Theory; Catastrophe Model; Cusp Catastrophe (search for similar items in EconPapers)
Date: 1988
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-349-19238-0_8

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DOI: 10.1007/978-1-349-19238-0_8

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