Exploring Deterministic Chaos in Economic Systems

Abstract

The term “chaotic” is used to describe the aperiodic behavior of an apparently random system. Behind the apparent random dynamics lies in fact the deterministic character of the system whose behavior is completely determined by the equations describing the deterministic chaotic dynamics. Chaos in proven to occur generally in complex nonlinear systems. Nonlinearity introduces in fact a better understanding of the complex natural phenomena. Nonlinear dynamics consists of a set of tools and concepts (period doubling, bifurcations, initial conditions sensitivity, attractors, phase space, phase portrait) allowing to analyze the dynamics generated by nonlinear processes. The paper presents the main ideas of the chaos theory and identifies the main papers that identified (or not) the presence of chaotic dynamics in different areas.