The chaotic economic growth model : China

Chaos theory reveals structure in aperiodic, dynamic systems. The number of nonlinear business cycle models use chaos theory to explain complex motion of the economy. The basic aim of this paper is to provide a relatively simple chaotic economic growth model that is capable of generating stable equilibria, cycles, or chaos. This paper confirms stable economic growth in China in the period 1980 - 2012 (www.imf.org). A key hypothesis of this work is based on the idea that the coefficient π = [ k + p m (s - b - n) / k ] plays a crucial role in explaining local stability of the gross domestic product, where, , s - private saving rate , p m - marginal labour productivity coefficient, b - average budget deficit coefficient, k - capital coefficient and n - net capital outflow rate.