Nonlinear Dynamics and Chaos: Application to Financial Markets in Pakistan * (FINANCIAL MARKETS IN Pakistan) (Report‪)‬

1. INTRODUCTION Recently there has been an increased interest in the theory of chaos by macroeconomists and financial economists. Originating in the natural sciences, applications of the theory have spread through various fields including brain research, optics, metereology, and economics. The attractiveness of chaotic dynamics is its ability to generate large movements which appear to be random, with greater frequency than linear models.