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Chaos Theory, Governing Dynamics of Physical Capital Accumulation (An Approach from Econophysics)
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Ahmad Googerdchian *1   , Seyyedeh DelAra Mousavi2 |
1- Faculty Member and Associate Professor at the Faculty of Economics, University of Isfahan
2- Graduate of the Master's Program in Theoretical Economics, Faculty of Economics, University of Isfahan |
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Abstract: (11 Views) |
The term "chaos" can be used to describe the behavior of a turbulent and seemingly random system that is highly sensitive to initial conditions. There are two types of chaos: deterministic and non-deterministic. Deterministic chaos represents the erratic motion of nonlinear systems governed by specific laws but yielding unpredictable outcomes due to sensitivity to initial conditions. In contrast, non-deterministic chaos arises when the equations governing a system's evolution are unknown, and its chaotic behavior results from uncertainties in the governing laws or the influence of random factors, leading to rapidly diverging trajectories. In both cases, the system remains predictable in the short term but becomes highly unpredictable in the long run due to its inherent complexity. This study examines the chaotic behavior of capital accumulation as a key factor in economic growth dynamics. Additionally, the chaotic fluctuations of capital accumulation can impact credit demand, banking liquidity, interest rates, and investment flows, thereby complicating monetary policymakers' decision-making processes. To analyze this, time series data on capital accumulation in Iran’s economy from 1979 to 2022 were examined. The results of the BDS test confirm the nonlinear behavior of this variable. The calculation of the Lyapunov exponent further validates the chaotic nature of the time series. Moreover, the Hurst exponent test indicates that this variable exhibits long-term memory.
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Article number: 4 |
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Full-Text [DOCX 412 kb]
(5 Downloads)
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Type of Study: Empirical Study |
Subject:
Macroeconomics: Consumption, Saving, Production, Employment, and Investment (E2)
Received: 2025/03/2 | Accepted: 2025/08/10 | Published: 2025/09/23
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