A Nonlinear Dynamic Systems Analysis of the Bulgarian Economy in the 1990s

Ivan Kostov

Economic Studies journal, 2026, issue 1, 3-19

Abstract: This article analyses Bulgaria’s economic breakdowns of 1990 and 1996-1997 using catastrophe theory and chaos theory. It introduces the concept of macroeconomic catastrophe, defined as a systemic process in which key sectors – monetary, fiscal, banking, real, trade, and external – simultaneously undergo bifurcation, enter a chaotic regime, and settle into a new attractor. This framework moves beyond descriptive terms such as “crisis” or “collapse” and provides conceptual clarity to the historiography of Bulgaria’s transition. The comparative analysis demonstrates that the 1990 catastrophe, though predictable, produced only an incomplete and unstable market regime, whereas the 1996-1997 catastrophe, less foreseeable and marked by near-maximal chaos, resulted in an institutionally stabilised macroeconomic framework. The distinction is drawn through two indicators: structural predictability and induced chaos. The study contributes methodologically by applying nonlinear dynamic systems analysis to macroeconomics, and politically by highlighting the role of institutional stabilisers – fiscal consolidation, the currency board, banking supervision, restitution, privatisation, concessions, and EU integration – in shortening chaotic phases and preventing systemic collapse.

JEL-codes: B41 C65 E32 E63 N14 P27 (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:bas:econst:y:2026:i:1:p:3-19

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