Business Cycle Modeling Between Financial Crises and Black Swans : Ornstein-Uhlenbeck Stochastic Process versus Kaldor Deterministic Chaotic Model

Business cycles are oscillations in economy because of recessions and expansions. In this paper we investigate the oscillation of the Gross Domestic Product (GDP) as a result of its relations with the other main macroeconomic variables such as capital, consumption and investment. There is a long-standing debate about chaos and non-linear dynamics in economy and even the usefulness of those concepts has been questioned. Stochastic modeling has proven to be able to represent reality fairly well. However a stochastic behavior implies that reality is about exogenous randomness, while a chaotic behavior means that reality is deterministic and non-linearities are endogenous. In this paper we compare an Ornstein-Uhlenbeck stochastic process with a Kaldor-Kalecki deterministic chaotic model to understand which one fits better real data and we show that our chaotic model is able to simulate black swans