Stock market and motion of a variable mass spring

Enrique Canessa

Physica A: Statistical Mechanics and its Applications, 2009, vol. 388, issue 11, 2168-2172

Abstract: We establish an analogy between the motion of spring whose mass increases linearly with time and volatile stock market dynamics within an economic model based on simple temporal demand and supply functions [E. Canessa, J. Phys. A 33 (2000) 3637]. The total system energy Et is shown to be proportional to a decreasing time dependent spring constant kt. This model allows to derive log-periodicity cos[log(t−tc)] on commodity prices and oscillations (surplus and shortages) in the level of stocks. We also made an attempt to connect these results to the Tsallis statistics parameter q based on a possible force–entropy correlation [E. Canessa, Physica A 341(2004) 165] and find that the Tsallis second entropic term ∑i=1Wpiq/(q−1) relates to the square of the demand (or supply) function.

Keywords: Econophysics; Financial markets; Business and management (search for similar items in EconPapers)
Date: 2009
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Persistent link: https://EconPapers.repec.org/RePEc:eee:phsmap:v:388:y:2009:i:11:p:2168-2172

DOI: 10.1016/j.physa.2009.02.010

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