Related papers: May's Instability in Large Economies
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…
A new model ecosystem consisting of many interacting species is introduced. The species are connected through a random matrix with a given connectivity. It is shown that the system is organized close to a boundary of marginal stability in…
Why are large, complex ecosystems stable? Both theory and simulations of current models predict the onset of instability with growing size and complexity, so for decades it has been conjectured that ecosystems must have some unidentified…
We address the problem of banking system resilience by applying off-equilibrium statistical physics to a system of particles, representing the economic agents, modelled according to the theoretical foundation of the current banking…
Randomly-assembled dynamical systems are theoretically predicted to be unstable upon crossing a critical threshold of complexity, as first shown by May. Yet, empirical complex systems exhibit remarkable stability, indicating the presence of…
We develop a model where firms determine the price at which they sell their differentiable goods, the volume that they produce, and the inputs (types and amounts) that they purchase from other firms. A steady-state production network…
The transient fluctuation of the prosperity of firms in a network economy is investigated with an abstract stochastic model. The model describes the profit which firms make when they sell materials to a firm which produces a product and the…
We model the production of complex goods in a large supply network. Each firm sources several essential inputs through relationships with other firms. Individual supply relationships are at risk of idiosyncratic failure, which threatens to…
Complex evolving systems such as the biosphere, ecosystems and societies exhibit sudden collapses, for reasons that are only partially understood. Here we study this phenomenon using a mathematical model of a system that evolves under…
We explore the nonlinear dynamics of a macroeconomic model with resource constraints. The dynamics is derived from a production function that considers capital and a generalized form of energy as inputs. Energy, the new variable, is…
On a global level, ecological communities are being perturbed at an unprecedented rate by human activities and environmental instabilities. Yet, we understand little about what factors facilitate or impede long-term persistence of these…
Random matrix theory successfully connects the structure of interactions of large ecological communities to their ability to respond to perturbations. One of the most debated aspects of this approach is the missing role of population…
In this chapter the complex systems are discussed in the context of economic and business policy and decision making. It will be showed and motivated that social systems are typically chaotic, non-linear and/or non-equilibrium and therefore…
An explanation for the political processes leading to the sudden collapse of empires and states would be useful for understanding both historical and contemporary political events. We seek a general description of state collapse spanning…
Social, biological and economic networks grow and decline with occasional fragmentation and re-formation, often explained in terms of external perturbations. We show that these phenomena can be a direct consequence of simple imitation and…
Networks in nature do not act in isolation but instead exchange information, and depend on each other to function properly. An incipient theory of Networks of Networks have shown that connected random networks may very easily result in…
Dynamical systems with components whose sizes evolve according to multiplicative stochastic rules have been recently combined with entry and exit processes. We show that the assumptions usually made in modeling exits are at odds with the…
In the pursuit of ever increasing efficiency and growth, our economies have evolved to remarkable degrees of complexity, with nested production processes feeding each other in order to create products of greater sophistication from less…
Modern macroeconomic theories were unable to foresee the last Great Recession and could neither predict its prolonged duration nor the recovery rate. They are based on supply-demand equilibria that do not exist during recessionary shocks.…
In 1972, Robert May triggered a worldwide research program studying ecological communities using random matrix theory. Yet, it remains unclear if and when we can treat real communities as random ecosystems. Here, we draw on recent progress…