CHAOS: economic theory vs. analytic techniques

[6155GUASTELL@xxxxxxxxxxxxxxx]

Have been following following the chaos-related postings on PKT
with great joy. Time to splurge my one-a-days on a postfest...


Except From: Galbraith.James@xxxxxxxxxxxxxxx (James K. Galbraith)

>        - Finally, there is chaos, which has many possibilities for
>economists, most unexploited. The Santa Fe approach has been the most
>prominent effort but fairly unproductive, so far anyway in my view, because
>it has tried to domesticate chaos and complexity and bring them into the
>neoclassical household.  Happily they will not come. I teach my students

I think the preoccupation of the SFI crowd is on the numerics of
chaos prediction, tests for chaos, and whether or not chaos really
exists in econometric time series. The advent of The Prediction
Corporation, which, last I heard, is using genetic algorithms to
identify sequences of values that make up repeated sequence in a
chaotic series.

The real merits of the nonlinear dynamics approach to things, IMO,
it to integrate economic *theory*, if not several of them into a
hybrid, dynamically driven theory. This approach has worked well in
psychology so far, although the works that typify this view are
largely in press right now, but scheduled for later this year.

--Stephen Guastello