Application of Theories of Complexity and Chaos to Economic Misgovernance | Science Publications

Journal of Mathematics and Statistics

Nasser Elkanj¹  Partha Gangopadhyay¹  Mustafa A. Rahman¹ 

关键词: Local expenditure;    Li-York theorem;    nash equilibrium;    multiple equilibria;    bifurcation chaos;    developing nations;    local government system;    highly fragile;    multiple equilibria;    developed countries;   

DOI  :  10.3844/jmssp.2011.239.248

学科分类：社会科学、人文和艺术（综合）

来源: Science Publications

【 摘 要 】

Problem statement: In this study we develop a comprehensive model involving local taxes,intergovernmental transfers and bureaucratic corruption to characterize a fiscal equilibrium in order toexplain the provision of local (public) expenditure in developing nations. The main goal of theresearch is to explain economic misgovernance as an equilibrium phenomenon, which is thereforeexpected to persist over time despite serious economic and social costs. Approach: We develop aninteractive model of fiscal gaming to understand economic misgovernance in the context of gametheory. Resutls: It is constructively argued that the proposed fiscal game is beset with multipleequilibria and the consequent indeterminacy. The possibility of unstable equilibria, or an absence ofpure-strategy equilibrium renders the system highly fragile. We also demonstrate the possibility ofserious bifurcations of a stable fiscal equilibrium that loses stability with changes in values of relevantparameters. We extend this model further to argue how the chaotic behavior and complexities cancharacterize the dynamics of decision-making in this present context. Conclusion: The emergence ofchaos can undermine the efficiency and predictability of the equilibrium of the proposed fiscal game,which can in turn seriously impinge on the quality of local goods in developing nations. We argue thatan understanding of the fragility and complexity of local government system is essential for policymakers for achieving a sustainable local government system in developing nations.

【 授权许可】

Unknown