Business cycles, bifurcations and chaos in a neo-classical model with investment dynamics

Stephane Hallegatte, Michael Ghil, Patrice Dumas and Jean-Charles Hourcade

Journal of Economic Behavior & Organization, 2008, vol. 67, issue 1, 57-77

Abstract: This paper presents a non-equilibrium dynamic model (NEDyM) that introduces investment dynamics and non-equilibrium effects into a Solow growth model. NEDyM can reproduce several typical economic regimes and, for certain ranges of parameter values, exhibits endogenous business cycles with realistic characteristics. The cycles arise from the investment-profit instability and are constrained by the increase in labor costs and the inertia of production capacity. For other parameter ranges, the model exhibits chaotic behavior. These results show that complex variability in the economic system may be due to deterministic, intrinsic factors, even if the long-term equilibrium is neo-classical in nature.

Date: 2008
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (31)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0167-2681(07)00111-4
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Business Cycles, Bifurcations and Chaos in a Neo-Classical Model with Investment Dynamics (2008)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:67:y:2008:i:1:p:57-77

Access Statistics for this article

Journal of Economic Behavior & Organization is currently edited by Houser, D. and Puzzello, D.

More articles in Journal of Economic Behavior & Organization from Elsevier
Bibliographic data for series maintained by Catherine Liu ().