No label defined (Q4032142)

The apparent aim of the author is to produce a mathematically rigorous introduction to nonlinear dynamics and chaos theory for economists and, possibly, for other applied scientists. Therefore, the most recent and deep results of the field are presented in a fairly mathematician-like manner in clear cut definitions and theorems but all the proofs are omitted and replaced by intuitive explanations of the concepts and facts mentioned. An overwhelming part of the text contains practical suggestions about the applications of the results, and an integral part of the book is a software presentation covering most of the methods mentioned. The mathematician-reviewer believes that the aim has been accomplished but the final word in this respect will be said, obviously, by the economist readers of the book. The first part contains the theory. Here one finds an introduction discussing, among other things, the role of chaotic dynamics when considering business cycles and equilibrium and disequilibrium dynamics, and an informal discussion of deterministic versus stochastic view points of chaos. The theory presented treats flows, attractors, stability, Lyapunov's direct method, bifurcation in general and Hopf bifurcation in particular, ergodic theory, spectral analysis, Lyapunov characteristic exponents, fractal dimensions, symbolic dynamics, transitions to chaos, period doubling etc. The presentation is correct and seems to be, at the same time, understandable to non-mathematician applied scientists. The definition of orbital asymptotic stability is missing though the concept is used in the Hopf bifurcation theorem 2.4. Definition 2.12 of asymptotic stability is, clearly, not applicable to non-constant solutions of autonomous systems. Smale's horseshoe, contrary to what is written on p. 147, is not structurally stable and is, actually, the first example showing that structurally stable systems are not dense in dimensions higher than two. On the other hand the short description of fractal dimensions and the treatment of the methods for their determination is excellent. Considerable effort is made to show how qualitative properties can be extracted from experimental data. Part two presents applications to economics. Here one finds enlightening discussions about discrete versus continuous models and the role of delay, methods for detecting chaos, a study of overlapping-generations models, applications to inventory business cycles, etc. The reader who has got as far as p. 282 even without grasping all the theoretical subtleties of the presentation will, probably, accept as realistic the author's conclusion (iii): ``We have obtained rather strong evidence of chaoticity in the DM/\$ daily exchange rate.'' Part three (the work of G. Gallo) is a manual of the software DMC which implements the methods presented for computers. The book makes a pleasant and useful reading and will, probably, contribute to the spread of the nonlinear dynamics approach in mathematical economics.