Non-Linear Dynamics and Complexity in Economics: A Historical Overview

Abstract

In the last years, non-linear dynamics and complexity gained an important role in economics. Non-linear models are the analytical foundation of complex dynamic theory. This class of models is able to capture more conveniently and more naturally economic behaviors that are non-regular, such as financial market dynamics, economic growth, price fluctuations, business cycle, and diffusion processes. Furthermore, from the early 80s, complex dynamics has become progressively a component of the more general theory of complexity initially developed at the Santa Fe Institute. This paper provides an overview of the historical evolution of these new approaches to economics. In particular, we emphasize the role of mathematical tools that have been applied to formalize dynamic problems in economics.