Controlling Chaos in the Kaldor Model.

Using Kaldor's business cycle model we show how a chaotic system with limited resources can be controlled in the general case where the equilibrium which we want to stabilize is not a saddle point. This problem has considerable economic relevance because it cannot be assumed that equilibria can always be characterized by a saddle point. We choose the volume of public investment as the control variable. It turns out that particular properties of chaotic systems can be applied advantageously to control the economy. These systems therefore inhibit more flexibility than traditional non chaotic models.