Abstract
AbstractWhile most examples of complex motion in economic dynamics employ a discrete‐time concept, chaos can also emerge in continuous‐time, nonlinear economic models. It is argued that, (depending on the level of aggregation in the economy) the use of the continuous‐time concept can be mandatory in economic dynamics. The Šil'nikov scenario, based on the existence of homoclinic orbits, is used as a formal means to illustrate the emergence of complex motion in two simple examples from traditional business cycle theory. The consideration of slight nonlinearities in a generalized version of the standard Metzler model with inventories and in Phillips' multiplier‐accelerator model can imply chaotic behavior.
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