2 Citations (Scopus)

Abstract

In this paper we derive a Phillips curve as the image of a chaotic attractor of the state variables of a non-linear dynamical system describing the evolution of an economy. This has two important consequences: the Phillips curve in our model is a true long-run phenomenon, but to exploit the apparent unemployment-inflation trade-off may require unrealistically complex policy measures. The model is based on an overlapping-generations non-tatonnement approach involving temporary equilibria with stochastic rationing in each period and price adjustment between successive periods. In this way we are able to obtain complex sequences of consistent allocations allowing for recurrent unemployment and inflation.
Original languageEnglish
Pages (from-to)1-26
Number of pages26
JournalJOURNAL OF ECONOMIC DYNAMICS & CONTROL
Publication statusPublished - 2003

Keywords

  • Complex Dynamics
  • Non-tatonnement
  • Phillips curve

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