@techreport{da7233dbec7141f8b3d6db97ea00f116,
title = "Chaotic Planning Solutions in the Textbook Model of Labor Market Search and Matching",
abstract = "This paper demonstrates that cyclical and chaotic planning solutions are possible in the standard textbook model of search and matching in labor markets. More specifically, it takes a discretetime adaptation of the continuous-time matching economy described in Pissarides (1990, 2001), and computes the solution to the dynamic planning problem.The solution is shown to be completely characterized by a first-order, non-linear map with a unique stationary solution.Additionally, the existence of a large number of periodic and even aperiodic non-stationary solutions is shown.Even when the well-known Li-Yorke and three-period cycle conditions for chaos are violated, we are able to verify the new Mitra (2001) su.cient condition for topological chaos.The implication is that even in a simple economy characterized by search and matching frictions, an omniscient social planner may have to contend with a fairly robust and bewildering variety of possible dynamic paths.",
keywords = "labour market, planning, matching, chaos, job search",
author = "J. Bhattacharya and H. Bunzel",
note = "Pagination: 20",
year = "2003",
language = "English",
volume = "2003-15",
series = "CentER Discussion Paper",
publisher = "Macroeconomics",
type = "WorkingPaper",
institution = "Macroeconomics",
}