New Methods and Understanding in Economic Dynamics? An Introductory Guide to Chaos and Economics

Abstract

This paper considers the relevance of chaos theory to economics. It provides an introductory survey of the central ideas of chaos and non-linear dynamical systems at a level which is appropriate for the non-technical reader, and provides pointers to accessible reading. The failures of linear modelling are outlined, after which the major features of non-linear and chaotic dynamical systems are explained and explored. This is followed by sections discussing the implications for economic methodology and the directions of theoretical and empirical research.