The Iterative Nature of a Class of Economic Dynamics
Year: 2015 Volume: 9 Issue: 3 Pages: 155-168
Abstract: This work aims to demonstrate a rather specific “iterative nature” existing in a class of regular economic dynamics by revisiting two typical economic concepts as informative examples, viz., random utility and stochastic growth. We begin with a formal treatment of discrete dynamical system and its popular derivation, iterated function system, so that a solid foundation could be laid for our analysis of economic dynamics. Two economic systems afterwards are constructed to show how random utility function and stochastic growth in a classical economy could be essentially driven by some iterative elements. Besides, our analyses also implicitly show that a quite complex economic dynamics carrying substantial randomness could basically originate in some fairly simple dynamic principles.
JEL classification: C61, D99
Keywords: Dynamical system, iterated function system, random utility function, stochastic growth, chaos
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