When analyzing a dynamic economic model, one fundamental question is are the dynamics simple or chaotic? Inverse limits, as an area of topology, has its origins in the 1920s and since the 1950s has been very useful as a means of constructing "pathological" continua. However, since the 1980s,...

Most economic models do not suggest an optimal fiscal policy in which the government's budget is balanced each period. Conventional wisdom suggests that the government run surpluses and deficits to smooth taxes. In this paper, I use an approach which brings together real business cycle theory...

Is a balanced-budget rule compatible with a government honoring its debt obligations? According to the conventional explanation, governments honor their debt obligations to maintain a good reputation for future borrowing. The ability of borrowing is desirable because it allows for greater tax...

Schmitt-Grohé and Uribe [11] illustrate that a balanced-budget rule can lead to aggregate instability. In particular, under such a rule it is possible for a steady state to be locally indeterminate, and therefore sunspot equilibria are possible. In this paper, I extend their analysis to...

Benhabib and Farmer [1996. Indeterminacy and sector specific externalities. Journal of Monetary Economics 37, 397-419] explore the possibility of local indeterminacy in a two-sector model with sector-specific externalities. They find that very small sector-specific externalities are sufficient...

Some economic models like the cash-in-advance model of money or overlapping generations model have the property that the dynamical system characterizing equilibria in the model are multi-valued going forward in time, but single-valued going backward in time, i.e., the model or dynamical system...