Cycles and chaos in a socialist economy

Abstract This paper deals with the dynamics of a continuous piecewise linear model of a socialist economy. The model has Hicksian-type nonlinearities: it is a linear model with ceilings and floors. Although the model is quite simple, it produces a variety of different new phenomena. In addition to stable cycles appearing in Simonovits (1991b), we demonstrate chaotic and quasi-periodic behavior.We investigate how the dynamics of the model depends on the control parameters, and encounter border-crossing bifurcations (a rather new type of local bifurcation).

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