Regime Switches in Economic Dynamic Systems

This thesis examines regime shifts within dynamic economic systems, investigating how transi- tions between distinct states occur under certain conditions. It begins by defining regime shifts conceptually and explores economic scenarios where these shifts are likely, including examples of historical economic events. Core concepts such as thresholds, tipping points, and bifurca- tions are first discussed descriptively and later analyzed mathematically. To provide a formal understanding, essential mathematical tools are introduced, including dynamic systems, equi- librium stability, stochastic modeling, time series analysis, hazard points, Skiba points, Markov chains, and Poisson processes. In the final section, a recent model addressing adaptation to climate tipping points is analyzed in depth. This model, developed as part of the IIASA Young Scientists Summer Program, provides insights into preparing for and adapting to environmental regime shifts, illustrating practical applications of theoretical concepts explored in this thesis.