How Market Economies Come to Live and Grow on the Edge of Chaos

C-Rene Dominique

MPRA Paper from University Library of Munich, Germany

Abstract: Summary: In a Hayek-Friedman-Lucas world, market economies are assumed to be natural, stable, and ergodic; hence, government policies are harmful to their efficiency. We develop a nonlinear dissipative dynamic model that shows that market economies instead live on the edge of chaos. We next appeal to the theory of differential equation to show that if they do not usually dissipate the totality of the information produced by their evolution it is due to a far-off self-organized equilibrium brought about by a spontaneous phase change originating in an optimal government policy.

Keywords: Keywords: Unstable manifolds; Lyapunov Spectrum; information dimension; metric entropy; edge of chaos; self-organized equilibria; endogenous growth. (search for similar items in EconPapers)
JEL-codes: C61 C62 C65 (search for similar items in EconPapers)
Date: 2015-08-04
New Economics Papers: this item is included in nep-evo, nep-hpe and nep-pke
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:65945

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