ABSTRACT
There is no doubt that the economy is a very complex system. The traditional approach to understanding it has been to reduce complexities to simple rules and behaviours, abstracting many features of the real economy.
An alternative to reductionism consists of studying economic systems with a complexity approach. The complexity approach’s point of departure is that the behaviour of the whole is much more complex than the behaviour of the parts.
Complexity economics has focused on economic phenomena like business cycles, crises and other out-of-equilibrium behaviour. Its use of nonlinear models offers the advantage that the same model allows us to describe stable as well as unstable and even chaotic behaviours.
The use of nonlinear models in finance and the possibility of finding chaotic behaviour in economics are discussed. Models of interacting agents in economics and finance are mentioned as another promising line of research in complexity applied to economics.
Finally, another issue discussed in the chapter is whether the complexity approach is another twist of orthodoxy or if it constitutes a heterodox paradigm.
