| Abstract: | This paper discusses the role of lags in dynamic economic models. Applications of discrete dynamical systems to economics are considered and the shortcomings of their (implicit) treatment of lags are criticized. An abstract, probabilistic view of lags is then provided, within which fixed delay lags are shown to be a special case. A basic equivalence is proved between: (i) a system with an indefinitely large number of agents, reacting to inputs with randomly gamma distributed, discrete lags, and (ii) a system with one single ‘representative‘ agent reacting to inputs with a continuous, multiple exponential lag. Finally, the paper analyses a single-loop feedback system cuopling a multiple exponential lag and a non-linearity of the one-hump type. The dynamic behavior of the system is studied by means of analytical and numerical methods, and the conditions for periodic and chaotic solutions are investigated. |
