Premium
Robustness and Local Linearisation in Economic Models
Author(s) -
George Donald,
Oxley Les
Publication year - 1999
Publication title -
journal of economic surveys
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.657
H-Index - 92
eISSN - 1467-6419
pISSN - 0950-0804
DOI - 10.1111/1467-6419.00097
Subject(s) - robustness (evolution) , economics , nonlinear system , econometrics , macroeconomics , macroeconomic model , mathematical economics , biochemistry , chemistry , physics , quantum mechanics , gene
This paper discusses the importance of nonlinear dynamics from a theoretical and an empirical point of view. It stresses the need for global as opposed to local analysis and develops the important concept of robustness. Using this concept, the paper argues that much modern macroeconomics can be dismissed on methodological grounds alone. The paper also deals with the empirics of hyperinflation and with the detection of chaos in financial markets.