Stability of Pareto-Zipf Law in Non-Stationary Economies

Sorin Solomon and Peter Richmond
Authors registered in the RePEc Author Service: Sorin Solomon

No 11, Computing in Economics and Finance 2001 from Society for Computational Economics

Abstract: Generalized Lotka-Volterra (GLV) models extending the (70 year old) logistic equation to stochastic systems consisting of a multitude of competing auto-catalytic components lead to power distribution laws of the (100 year old) Pareto-Zipf type. In particular, when applied to economic systems, GLV leads to power laws in the relative individual wealth distribution and in the market returns. These power laws and their exponent a are invariant to arbitrary variations in the total wealth of the system and to other endogenous and exogenous factors. The measured value of the exponent a = 1.4 is related to built-in human social and biological constraints.

Keywords: Logistic Equation; Stochastic Multiplicative dynamics; Pareto power laws (search for similar items in EconPapers)
JEL-codes: C0 C6 (search for similar items in EconPapers)
Date: 2001-04-01
New Economics Papers: this item is included in nep-evo
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Working Paper: Stability of Pareto-Zipf Law in Non-Stationary Economies (2001)
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