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On Topological Chaos in the Robinson-Solow-Srinivasan Model

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  • Khan, M. Ali

    (Johns Hopkins U)

  • Mitra, Tapan

    (Cornell U)

Abstract

In this paper, we offer an instance of (topologically) chaotic optimal behavior in a twosector model with irreversible investment, originally formulated by Robinson, Solow and Srinivasan. Our result follows from the theory of turbulence in non-linear dynamical systems, and relies only on the existence of a continuous optimal policy function. The fact that there is a unique optimal program from each initial stock when future utilities are discounted by a factor smaller than the labor-capital ratio may be of independent interest.

Suggested Citation

  • Khan, M. Ali & Mitra, Tapan, 2004. "On Topological Chaos in the Robinson-Solow-Srinivasan Model," Working Papers 04-18, Cornell University, Center for Analytic Economics.
    • Handle: RePEc:ecl:corcae:04-18
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    References listed on IDEAS

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    1. Kazuo Nishimura & Makoto Yano, 2012. "On the Least Upper Bound of Discount Factors that are Compatible with Optimal Period-Three Cycles," Springer Books, in: John Stachurski & Alain Venditti & Makoto Yano (ed.), Nonlinear Dynamics in Equilibrium Models, edition 127, chapter 0, pages 165-191, Springer.
    2. Dutta, Prajit K. & Mitra, Tapan, 1989. "Maximum theorems for convex structures with an application to the theory of optimal intertemporal allocation," Journal of Mathematical Economics, Elsevier, vol. 18(1), pages 77-86, February.
    3. M. Ali Khan & Tapan Mitra, 2005. "On choice of technique in the Robinson–Solow–Srinivasan model," International Journal of Economic Theory, The International Society for Economic Theory, vol. 1(2), pages 83-110, June.
    4. McKenzie, Lionel W., 2005. "Optimal economic growth, turnpike theorems and comparative dynamics," Handbook of Mathematical Economics, in: K. J. Arrow & M.D. Intriligator (ed.), Handbook of Mathematical Economics, edition 2, volume 3, chapter 26, pages 1281-1355, Elsevier.
    5. Mitra, Tapan, 2001. "A Sufficient Condition for Topological Chaos with an Application to a Model of Endogenous Growth," Journal of Economic Theory, Elsevier, vol. 96(1-2), pages 133-152, January.
    6. M. Ali Khan & Tapan Mitra, 2007. "Optimal Growth In A Two‐Sector Rss Model Without Discounting: A Geometric Investigation," The Japanese Economic Review, Japanese Economic Association, vol. 58(2), pages 191-225, June.
    7. Lionel W. McKenzie, 2005. "Classical General Equilibrium Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262633302, December.
    8. Mitra, Tapan, 1996. "An Exact Discount Factor Restriction for Period-Three Cycles in Dynamic Optimization Models," Journal of Economic Theory, Elsevier, vol. 69(2), pages 281-305, May.
    9. Roy Radner, 1961. "Prices and the Turnpike: III. Paths of Economic Growth that are Optimal with Regard only to Final States: A Turnpike Theorem," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 28(2), pages 98-104.
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    Citations

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    Cited by:

    1. Orlando Gomes, 2006. "Routes to chaos in macroeconomic theory," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 33(6), pages 437-468, November.
    2. Orlando Gomes, 2006. "Routes to chaos in macroeconomic theory," Journal of Economic Studies, Emerald Group Publishing, vol. 33(6), pages 437-468, November.
    3. Bella, Giovanni, 2017. "Homoclinic bifurcation and the Belyakov degeneracy in a variant of the Romer model of endogenous growth," Chaos, Solitons & Fractals, Elsevier, vol. 104(C), pages 452-460.
    4. Makoto Yano & Yuichi Furukawa, 2021. "Two-Dimensional Constrained Chaos and Industrial Revolution Cycles with Mathemetical Appendices," KIER Working Papers 1057, Kyoto University, Institute of Economic Research.
    5. Deng, Liuchun & Khan, M. Ali, 2018. "On growing through cycles: Matsuyama’s M-map and Li–Yorke chaos," Journal of Mathematical Economics, Elsevier, vol. 74(C), pages 46-55.
    6. Orlando Gomes, 2007. "Routes to chaos in macroeconomic theory," Journal of Economic Studies, Emerald Group Publishing, vol. 33(6), pages 437-468, January.
    7. Deng, Liuchun & Khan, M. Ali & Mitra, Tapan, 2022. "Continuous unimodal maps in economic dynamics: On easily verifiable conditions for topological chaos," Journal of Economic Theory, Elsevier, vol. 201(C).
    8. Liuchun Deng & Minako Fujio & M. Ali Khan, 2023. "On optimal extinction in the matchbox two-sector model," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 76(2), pages 445-494, August.
    9. Deng, Liuchun & Khan, M. Ali & Mitra, Tapan, 2020. "Exact parametric restrictions for 3-cycles in the RSS model: A complete and comprehensive characterization," Journal of Mathematical Economics, Elsevier, vol. 90(C), pages 48-56.
    10. Orlando Gomes, 2006. "Local Bifurcations and Global Dynamics in a Solow-type Endogenous Business Cycles Model," Annals of Economics and Finance, Society for AEF, vol. 7(1), pages 91-127, May.
    11. Deng, Liuchun & Khan, M. Ali, 2018. "On Mitra’s sufficient condition for topological chaos: Seventeen years later," Economics Letters, Elsevier, vol. 164(C), pages 70-74.
    12. Bella, Giovanni & Mattana, Paolo & Venturi, Beatrice, 2017. "Shilnikov chaos in the Lucas model of endogenous growth," Journal of Economic Theory, Elsevier, vol. 172(C), pages 451-477.
    13. Ali Khan, M. & Piazza, Adriana, 2011. "Optimal cyclicity and chaos in the 2-sector RSS model: An anything-goes construction," Journal of Economic Behavior & Organization, Elsevier, vol. 80(3), pages 397-417.

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    More about this item

    JEL classification:

    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • O21 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Planning Models; Planning Policy

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