Related papers: May's Instability in Large Economies
Over fifty years ago, Robert May applied random matrix theory to show that as ecological systems grow in size, stability decreases. What emerged from this and the critique that followed was decades of what has been called the…
We study a dynamical model of interconnected firms which allows for certain market imperfections and frictions, restricted here to be myopic price forecasts and slow adjustment of production. Whereas the standard rational equilibrium is…
There has been a long-standing and at times fractious debate whether complex and large systems can be stable. In ecology, the so-called `diversity-stability debate' arose because mathematical analyses of ecosystem stability were either…
In his seminal work in the 1970s, Robert May suggested that there is an upper limit to the number of species that can be sustained in stable equilibrium by an ecosystem. This deduction was at odds with both intuition and the observed…
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…
We study how idiosyncratic firm-level shocks generate aggregate volatility and tail risk when they propagate through a production network under overlapping adjustment: new productivity draws arrive before the economy reaches the static…
Why do capitalist economies recurrently generate crises whose severity is disproportionate to the size of the triggering shock? This paper proposes a structural answer grounded in the evolutionary geometry of production networks. As…
Robert May famously used random matrix theory to predict that large, complex systems cannot admit stable fixed points. However, this general conclusion is not always supported by empirical observation: from cells to biomes, biological…
The Lotka-Volterra system is a set of ordinary differential equations describing growth of interacting ecological species. This model has gained renewed interest in the context of random interaction networks. One of the debated questions is…
In this letter we present a stochastic dynamic model which can explain economic cycles. We show that the macroscopic description yields a complex dynamical landscape consisting of multiple stable fixed points, each corresponding to a split…
Following the financial crisis of 2007-2008, a deep analogy between the origins of instability in financial systems and complex ecosystems has been pointed out: in both cases, topological features of network structures influence how easily…
Mays celebrated theoretical work of the 70s contradicted the established paradigm by demonstrating that complexity leads to instability in biological systems. Here Mays random-matrix modelling approach is generalized to realistic…
The theory of complex networks and of disordered systems is used to study the stability and dynamical properties of a simple model of material flow networks defined on random graphs. In particular we address instabilities that are…
Why are human societies unstable? Theories based on the observation of recurring patterns in historical data indicate that economic inequality, as well as social factors are key drivers. So far, models of this phenomenon are more…
According to the May-Wigner stability theorem, increasing the complexity of a network inevitably leads to its destabilization, such that a small perturbation will be able to disrupt the entire system. One of the principal arguments against…
Forty years ago, Robert May questioned a central belief in ecology by proving that sufficiently large or complex ecological networks have probability of persisting close to zero. To prove this point, he analyzed large networks in which…
Physical concepts developed to describe instabilities in traffic flows can be generalized in a way that allows one to understand the well-known instability of supply chains (the so-called ``bullwhip effect''). That is, small variations in…
We study how firm heterogeneity and market power affect macroeconomic fragility, defined as the probability of long slumps. We propose a theory in which the positive interaction between firm entry, competition and factor supply can give…
We study the disequilibrium dynamics of a stylised model of production networks in which firms use perishable and non-substitutable intermediate inputs, so that adverse idiosyncratic productivity shocks can trigger downstream shortages and…
Network theory is rapidly changing our understanding of complex systems, but the relevance of topological features for the dynamic behavior of metabolic networks, food webs, production systems, information networks, or cascade failures of…