Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/105911
Authors: 
Flaschel, Peter
Proaño, Christian
Year of Publication: 
2008
Series/Report no.: 
IMK Working Paper 14/2008
Abstract: 
We reconsider the issue of the (non-)equivalence of period and continuous time analysis in macroeconomic theory and its implications for the existence of chaotic dynamics in empirical macro. We start from the methodological precept that period and continuous time representations of the same macrostructure should give rise to the same qualitative outcome, i.e. in particular, that the results of period analysis should not depend on the length of the period. A simple example where this is fulfilled is given by the Solow growth model, while all chaotic dynamics in period models of dimension less than 3 are in conflict with this precept. We discuss a recent and typical example from the literature, where chaos results from an asymptotically stable continuous-time macroeconomic model when this is reformulated as a discrete-time model with a long period length.
Subjects: 
Period models
continuous time
(non-)equivalence
chaotic dynamics.
JEL: 
E24
E31
E32
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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