Are large complex economic systems unstable ?

Sitabhra Sinha

Papers from arXiv.org

Abstract: Although classical economic theory is based on the concept of stable equilibrium, real economic systems appear to be always out of equilibrium. Indeed, they share many of the dynamical features of other complex systems, e.g., ecological food-webs. We focus on the relation between increasing complexity of the economic network and its stability with respect to small perturbations in the dynamical variables associated with the constituent nodes. Inherent delays and multiple time-scales suggest that economic systems will be more likely to exhibit instabilities as their complexity is increased even though the speed at which transactions are conducted has increased many-fold through technological developments. Analogous to the birth of nonlinear dynamics from Poincare's work on the question of whether the solar system is stable, we suggest that similar theoretical developments may arise from efforts by econophysicists to understand the mechanisms by which instabilities arise in the economy.

Date: 2010-09
New Economics Papers: this item is included in nep-evo and nep-hpe
References: Add references at CitEc
Citations: View citations in EconPapers (4)

Published in Science and Culture, 76 (2010) 454-458

Downloads: (external link)
http://arxiv.org/pdf/1009.0972 Latest version (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:arx:papers:1009.0972

Access Statistics for this paper

More papers in Papers from arXiv.org
Bibliographic data for series maintained by arXiv administrators ().