Creator: Stutzer, Michael J. Series: Working paper (Federal Reserve Bank of Minneapolis. Research Dept.) Number: 140 Abstract:
The qualitative dynamics of a discrete time version of a deterministic, continuous time, nonlinear macro model formulated by Haavelmo are fully characterized. The methods of symbolic dynamics and ergodic theory are shown to provide a simple, effective means of analyzing the behavior of the resulting one-parameter family of first-order, deterministic, nonlinear difference equations. A complex periodic and random "aperiodic" orbit structure dependent on a key structural parameter is present, which contrasts with the total absence of such complexity in Haavelmo's continuous time version. Several implications for dynamic economic modelling are discussed.
Keyword: Erdogic theory, Symbolic dynamics, and Continuous time model Subject (JEL): E10 - General aggregative models - General and C01 - Mathematical and quantitative methods - General - Econometrics