SOURCES OF COMPLEX DYNAMICS IN 2-SECTOR GROWTH-MODELS

This paper develops a tractable multisectoral dynamic equilibrium model and provides a fairly complete analysis of the dynamics that may arise along the intertemporal competitive equilibrium path. Despite the fact that the environment displays neither random nor deterministic variability, the model may produce oscillations in aggregate variables such as output, consumption, and investment. We show that these oscillations can be exactly periodic, of any finite period n, and even totally aperiodic (chaotic). We characterize the parameter values for which each of these cases occur, but also provide some strong global asymptotic stability results. © 1990.