2D Chaos in the Interaction of Inflation and Unemployment: Moving Averages and the Modeling of High Frequency Macrodynamics. (18th June 2014)

• Record Type: Journal Article
• Authors: Flaschel, Peter; Proaño, Christian
• Other Names: Litak Grzegorz Academic Editor.
• Is Part Of: Journal of chaos. Volume 2014(2014)
• Publication Date: 2014-06-18
• Subjects: Quantum chaos -- Periodicals; Chaotic behavior in systems -- Periodicals; Chaotic behavior in systems; Quantum chaos; Electronic journals; Periodicals; 515.39
• DOI: 10.1155/2014/515637
• Languages: English
• ISSNs: 2356-7228

Abstract

Abstract : The paper argues that applicable macro is high frequency macro and the data generating process is therefore to be modeled in continuous time. It exemplifies this with a misuse of a 2D period model of monetarist type which becomes extremely overshooting, allowing for routes to "chaos, " when iterated at low frequencies. Instead of such low frequency procedures, we augment the model by a Keynesian feedback chain (the real rate of interest channel) to introduce local instability into the model. We also introduce heterogeneous opinion dynamics into it. The implied 4D dynamics are made bounded thereby, but seem to allow only complex limit cycles, with no transition towards strange attractors anymore.