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Shilnikov chaos in the Lucas model of endogenous growth

Giovanni Bella (), Paolo Mattana and Beatrice Venturi

Journal of Economic Theory, 2017, vol. 172, issue C, 451-477

Abstract: This paper shows that chaotic dynamics and global indeterminacy may characterize the Lucas (1988) endogenous growth model in its local determinacy region of the parameter space. This is achieved by means of the Shilnikov (1965) theorem, which exploits the existence of a family of homoclinic orbits doubly asymptotic to the balanced growth path, when it is a saddle-focus. The economic implications of these results are also discussed.

Keywords: Lucas model; Shilnikov chaos; Global indeterminacy; History versus expectations (search for similar items in EconPapers)
JEL-codes: C53 C62 O41 E32 (search for similar items in EconPapers)
Date: 2017
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Handle: RePEc:eee:jetheo:v:172:y:2017:i:c:p:451-477