Globalization — Entropy unification through the Theil index

Janusz Miśkiewicz

Physica A: Statistical Mechanics and its Applications, 2008, vol. 387, issue 26, 6595-6604

Abstract: A time series is remapped onto an entropy concept, based on the Theil index. The Manhattan distance between these surrogate series is calculated, and contrasted to the usual correlation distance measure. The idea is applied to several Gross Domestic Product (relative increments) of rich countries. Such distances are calculated for various time window sizes. The role of time averaging in such finite size windows is discussed. We construct the locally minimum spanning tree (LMST) corresponding to the distance matrix. Another hierarchical network structure (Unidirectional Minimal Length Path) is compared with the LMST for confirming that the mean distance between the most developed countries on different networks actually decreases in time, — which we consider as a proof of economy globalization. It is stressed that this entropy distance measure seems more suitable in detecting some “phase transition” in time series, like a globalization process than the usual correlation based measure.

Keywords: Econophysics; Time series analysis; Globalization; Entropy; Network; Minimum spanning tree (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:phsmap:v:387:y:2008:i:26:p:6595-6604

DOI: 10.1016/j.physa.2008.08.007

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