 On Economic Space notionInternational Review of Financial Analysis, 2016, vol. 47, issue C, 372-381 Abstract: This paper introduces Economic Space notion to expand capacity for economic and financial modeling. Introduction of Economic Space allows defining economic variables as functions of time and coordinates and opens the way for treating economic and financial relations similar to mathematical physics equations. Economic Space allows study of economic models on discreet and continuous spaces with different dimensions. The number of risks measured simultaneously determines Economic Space dimension. We present examples of modeling on Economic Space: option pricing and derivation of Black–Scholes–Merton equation on n-dimensional Economic Space; Markov processes and derivation of Fokker–Plank Equations. Usage of Economic Space allows construing approximations of Economics and Finance similar to physical kinetics and hydrodynamics and derives Wave Equations for Economic and Financial variables. Keywords: Financial modeling; Economic space; Risk ratings; Economic wave equations (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:47:y:2016:i:c:p:372-381 DOI: 10.1016/j.irfa.2016.01.001 Access Statistics for this article International Review of Financial Analysis is currently edited by B.M. Lucey More articles in International Review of Financial Analysis from Elsevier |
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