Related papers: Financial heat machine
Originally, the Carnot cycle is a theoretical thermodynamic cycle that provides an upper limit on the efficiency that any classical thermodynamic engine can achieve during the conversion of heat into work, or conversely, the efficiency of a…
By treating the financial market as a thermodynamic system, we establish a one-to-one correspondence between thermodynamic variables and economic quantities. Measured by the expected loss under the worst-case scenario, financial risk caused…
This paper introduces a novel approach to financial crisis prediction by establishing a thermodynamic-like framework derived from the fluctuation theorem of statistical physics. We define market temperature through the probability ratio of…
Motivated by empirical observations on the interplay of trends and reversion, a lattice gas model of financial markets is presented. The shares of an asset are modeled by gas molecules that are distributed across a hidden social network of…
We consider the thermodynamic approach to the description of economic systems and processes. The first and second laws of thermodynamics as applied to economic systems are derived and analyzed. It is shown that there is a deep analogy…
Recently, a formal analogy between the fluctuating diffusivity and thermodynamics has been proposed based on phenomena of heterogeneous diffusion observed in living cells. This not only offers the analogs of the quantity of heat and work as…
A thermodynamic approach to the description of economic systems and processes is developed. It is shown that there is a deep analogy between the parameters of thermodynamic and economic systems (markets); so each thermodynamic parameter can…
According to the laws of thermodynamics, no heat engine can beat the efficiency of a Carnot cycle. This efficiency traditionally comes with vanishing power output and practical designs, optimized for power, generally achieve far less.…
The minimal set of thermodynamic control parameters consists of a statistical (thermal) and a mechanical one. These suffice to introduce all the pertinent thermodynamic variables; thermodynamic processes can then be defined as paths on this…
A theoretical thermodynamic cycle more efficient than an infinite set of Carnot engines is presented. This result is unexpected from the point of view of classical thermodynamics.
We formulate thermodynamics of economic systems in terms of an arbitrary probability distribution for a conserved economic quantity. As in statistical physics, thermodynamic macroeconomic variables emerge as the mean value of microeconomic…
The Carnot cycle is a prototype of ideal heat engine to draw mechanical energy from the heat flux between two thermal baths with the maximum efficiency, dubbed as the Carnot efficiency $\eta_{\mathrm{C}}$. Such efficiency can only be…
A dynamical model of a highly efficient heat engine is proposed, where an applied temperature difference maintains the motion of particles around the circuit consisting of two asymmetric narrow channels, in one of which the current flows…
The document discusses the financial climate risk in the context of the banking industry, emphasizing the need for a comprehensive understanding of climate change across different spatial and temporal scales. It highlights the challenges in…
This paper develops a comprehensive theoretical framework that imports concepts from stochastic thermodynamics to model price impact and characterize the feasibility of round-trip arbitrage in financial markets. A trading cycle is treated…
Achieving the Carnot efficiency at finite power is a challenging problem in heat engines due to the trade-off relation between efficiency and power that holds for general heat engines. It is pointed out that the Carnot efficiency at finite…
In this paper, we test predictions of a new theory of macroeconomics, called "thermal macroeconomics." The theory aims to apply the mathematical structure of classical thermodynamics, including analogues of temperature and entropy, to…
The present paper analyses the formal parallelism existing between the laws of thermodynamics and some economic principles. Based on previous works, we shall show how the existence in Economics of principles analogous to those in…
Heat engines that convert thermal energy into work are a cornerstone of classical thermodynamics and remain an active area of contemporary research. Notable examples include microscopic heat engines, trade-off relations between power and…
This paper develops a unified framework in which economic dynamics is treated as evolutionary process analogous to those studied in natural sciences, including physics. Using methods from gauge field theory and plasticity, we show that the…