scientific article; zbMATH DE number 1322499

Publication date 2 November 1999

ergodically chaotic policy function Leontief production functions linear utility two-sector model

Strange attractors, chaotic dynamics of systems with hyperbolic behavior (37D45) Dynamical systems in optimization and economics (37N40) Economic growth models (91B62)

Review text

Authors's introduction: In a previous paper [Econometrica 63, 981-1001 (1995; Zbl 0840.90037)], using a two-sector model with Leontief production functions and a linear utility function, the authors demonstrated the existence of an ergodically chaotic policy function for a discount factor of future utilities arbitrarily close to 1. The proof of the main theorem in that paper was, however, highly abbreviated. At the same time, an important by-product of the theorem, i.e., the existence of a scramble set for an arbitrarily small discount rate, was not explicitly recognized. The purpose of this study is to provide an intuitive and constructive proof for this theorem and, in the course of that proof, to explicitly demonstrate the existence of a scrambled set. The following part of this study is organized as follows. Section 2 introduces their model. Section 3 discusses the mathematical results an ergodic chaos on which their study is based. Section 4 provides a sufficient condition for a policy function to be ergodically chaotic. Section 5 provides numerical examples. Section 6 demonstrates the existence of ergodically chaotic optimal paths for a value of discount factor arbitrarily close to 1.

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