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Optimal ergodic chaos under slow capital depreciation
Author(s) -
Sato Kenji,
Yano Makoto
Publication year - 2013
Publication title -
international journal of economic theory
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.351
H-Index - 11
eISSN - 1742-7363
pISSN - 1742-7355
DOI - 10.1111/j.1742-7363.2013.12009.x
Subject(s) - depreciation (economics) , unobservable , economics , observable , capital (architecture) , chaos (operating system) , ergodic theory , monetary economics , econometrics , microeconomics , capital formation , mathematics , physics , computer science , financial capital , profit (economics) , mathematical analysis , computer security , archaeology , quantum mechanics , history
It has been known that, in a standard two‐sector dynamic model, slow capital depreciation may result in a unimodal system with a kinked peak and that this system may be topological chaos, which is unobservable in Grandmont's sense. However, whether or not slow capital depreciation can cause observable chaos has not been examined in the existing literature. The present study demonstrates that slow capital depreciation may cause ergodic chaos, which is observable, by using a recent result of Sato and Yano (2012).