Cascading failures: dynamics, stability and control
Optimization and Control
2023-07-06 v2 Dynamical Systems
Abstract
We develop a dynamic model of cascading failures in a financial network whereby cross-holdings are viewed as feedback, external assets investments as inputs and failure penalties as static nonlinearities. We provide sufficient milder and stronger conditions for the system to be a positive one, and study equilibrium points and stability. Stability implies absence of cascades and convergence of market values to constant values. We provide a constructive method for control design to obtain stabilizing market investments in the form of feedback-feedforward control inputs.
Cite
@article{arxiv.2305.00838,
title = {Cascading failures: dynamics, stability and control},
author = {Stefanny Ramirez and Maaike Odijk and Dario Bauso},
journal= {arXiv preprint arXiv:2305.00838},
year = {2023}
}