Crisis-induced intermittency in non-linear economic cycles

Abstract

A new type of economic intermittency is found in non-linear business cycles. Following a merging crisis, a complex economic system has the ability to retain memory of its weakly chaotic dynamics prior to crisis. The resulting time series exhibits episodic regime switching between periods of weakly and strongly chaotic fluctuations of economic variables. The characteristic intermittency time, useful for forecasting the average duration of contractionary phases and the turning point to the expansionary phase of business cycles, is computed from the simulated time series.

Acknowledgements

This work is supported by CNPq and forms part of Ph.D. Thesis in Economics by A C.-L. Chian at the University of Adelaide.