Hysteresis of economic networks in an XY model
Mohammad Sherafati and
Mauro Gallegati ()
Physica A: Statistical Mechanics and its Applications, 2019, vol. 513, issue C, 644-652
Many-body systems can have multiple equilibria. Though the energy of equilibria might be the same, still systems may resist to switch from an unfavored equilibrium to a favored one. In this paper we investigate occurrence of such phenomenon in economic networks. In times of crisis when governments intend to stimulate economy, a relevant question is on the proper size of stimulus bill. To address the answer, we emphasize the role of hysteresis in economic networks. In times of crises, firms and corporations cut their productions; now since their level of activity is correlated, metastable features in the network become prominent. This means that economic networks resist against the recovery actions. To measure the size of resistance in the network against recovery, we deploy the XY model. Though theoretically the XY model has no hysteresis, when it comes to the kinetic behavior in the deterministic regimes, we observe a dynamic hysteresis. We find that to overcome the hysteresis of the network, a minimum size of stimulation is needed for success. Our simulations show that as long as the networks are Watts–Strogatz, such minimum is independent of the characteristics of the networks.
Keywords: Economic networks; Hysteresis; Stimulation; Metastability; XY model (search for similar items in EconPapers)
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Working Paper: Hysteresis of economic networks in an XY model (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:phsmap:v:513:y:2019:i:c:p:644-652
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