Related papers: Economic Amplifier - A New Econophysics Model
This article is a response to the recent Worrying Trends in Econophysics critique written by four respected theoretical economists. Two of the four have written books and papers that provide very useful critical analyses of the shortcomings…
We believe that economists have much to learn from educational research practices and related pedagogical innovations in other disciplines, in particular physics education. In this paper we identify three key features of physics education…
The paper presents instructive interdisciplinary applications of constrained mechanics calculus in economics on a level appropriate for the undergraduate physics education. The aim of the paper is: 1. to meet the demand for illustrative…
The methods of statistical physics of open systems are used for describing the time dependence of economic characteristics (income, profit, cost, supply, currency etc.) and their correlations with each other. Nonlinear equations (analogies…
We consider an ideal closed stock market, in which 100 traders have economic activities. The assets of the traders change through buying and selling stocks. We simulate the assets under conservation of both total currency and total number…
The concept of power can be explored at several scales: from physical action and process effectuation, all the way to complex social dynamics. A spectrum-wide analysis of power requires attention to the fundamental principles that constrain…
Dynamic factor models have been developed out of the need of analyzing and forecasting time series in increasingly high dimensions. While mathematical statisticians faced with inference problems in high-dimensional observation spaces were…
Models for spin systems known from statistical physics are used in econometrics in the form of agent-based models. Econophysics research in econometrics is increasingly developing general market models that describe exchange phenomena and…
In this paper we discuss recent developments in econometrics that we view as important for empirical researchers working on policy evaluation questions. We focus on three main areas, where in each case we highlight recommendations for…
One 'problem' with the 21st century world, particularly the economic and business worlds, is the phenomenal and increasing number of interconnections between economic agents (consumers, firms, banks, markets, national economies). This…
Finite mixture models have been a very important tool for exploring complex data structures in many scientific areas, for example, economics, epidemiology, finance. In the past decade, semiparametric techniques have been popularly…
An axiomatic approach to macroeconomics based on the mathematical structure of thermodynamics is presented. It deduces relations between aggregate properties of an economy, concerning quantities and flows of goods and money, prices and the…
This article provides a selective review on the recent literature on econometric models of network formation. The survey starts with a brief exposition on basic concepts and tools for the statistical description of networks. I then offer a…
In economics, construction of perfect models in a way that would be comparable to the standards customary in physical sciences is generally not feasible. In particular, the observed value for an economic equilibrium may deviate…
This paper synthesizes recent advances in the econometrics of difference-in-differences (DiD) and provides concrete recommendations for practitioners. We begin by articulating a simple set of ``canonical'' assumptions under which the…
It is still common wisdom amongst economists, politicians and lay people that economic growth is a necessity of our social systems, at least to avoid distributional conflicts. This paper challenges such belief moving from a purely physical…
Modern evolvements of the technologies have been leading to a profound influence on the financial market. The introduction of constituents like Exchange-Traded Funds, and the wide-use of advanced technologies such as algorithmic trading,…
An important issue for many economic experiments is how the experimenter can ensure sufficient power for rejecting one or more hypotheses. Here, we apply methods developed mainly within the area of clinical trials for testing multiple…
In this review article we explore several recent advances in the quantitative modeling of financial markets. We begin with the Efficient Markets Hypothesis and describe how this controversial idea has stimulated a number of new directions…
In complex systems, many different parts interact in non-obvious ways. Traditional research focuses on a few or a single aspect of the problem so as to analyze it with the tools available. To get a better insight of phenomena that emerge…