Abstract
The investigation of chaotic dynamical systems has been a major focus of research in economic dynamics during the last decade. In the fashion of several applied sciences, an emphasis has been put on the description of so-called strange attractors, i.e., sets of points to which trajectories starting in a neighbourhood of this set eventually converge but which are neither a fixed point nor a closed curve. Strange attractors have attracted the attention of many economists because the motion on such a set is characterized by a sensitive dependence on initial conditions: two trajectories starting at arbitrarily close initial points eventually diverge implying that the two generated time series display different frequencies and amplitudes. This sensitive dependence has been considered an indication of the potential impossibility of predicting economic time series.
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Lorenz, HW. (1993). Complex Transient Motion in Continuous-Time Economic Models. In: Nijkamp, P., Reggiani, A. (eds) Nonlinear Evolution of Spatial Economic Systems. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-78463-7_5
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DOI: https://doi.org/10.1007/978-3-642-78463-7_5
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