  This paper shows that with mechanistic primary budget rules and with some
simple assumptions on interest rates the well-known debt dynamics equation
transforms into the infamous logistic map. The logistic map has very peculiar
and rich nonlinear behaviour and it can exhibit deterministic chaos with
certain parameter regimes. Deterministic chaos means the existence of the
butterfly effect which in turn is qualitatively very important, as it shows
that even deterministic budget rules produce unpredictable behaviour of the
debt-to-GDP ratio, as chaotic systems are extremely sensitive to initial
conditions.
