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Economics as energy framework: Complexity, turbulence, financial crises, and protectionism

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  • Rutledge, John

Abstract

This paper presents a framework for thinking about economic growth, trade, and capital flows viewed as transformations of current and vintage solar energy, stored in the form of natural resources, human capital, physical capital and technology described by the laws of thermodynamics. Recent developments in nonequilibrium thermodynamics (NET) show how efficient global capital markets and high-speed communications networks accelerate energy flow and growth but also create turbulence, financial crisis, protectionism and conflict. The paper discusses the role that NET can play in helping us understand stock market bubbles and financial crises.

Suggested Citation

  • Rutledge, John, 2015. "Economics as energy framework: Complexity, turbulence, financial crises, and protectionism," Review of Financial Economics, Elsevier, vol. 25(C), pages 10-18.
    • Handle: RePEc:eee:revfin:v:25:y:2015:i:c:p:10-18
    DOI: 10.1016/j.rfe.2015.02.003
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    References listed on IDEAS

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    Cited by:

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    3. Al Aali-Bujari & Francisco Venegas-Mart nez & Roberto J. Santill n-Salgado, 2018. "On the Stock Market-Electricity Sector Nexus in Latin America: A Dynamic Panel Data Model," International Journal of Energy Economics and Policy, Econjournals, vol. 8(6), pages 148-154.
    4. Iordanis Karagiannidis & D. Sykes Wilford, 2015. "Modeling fund and portfolio risk: A bi‐modal approach to analyzing risk in turbulent markets," Review of Financial Economics, John Wiley & Sons, vol. 25(1), pages 19-26, April.

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    More about this item

    Keywords

    Non-equilibrium; Turbulence; Financial crisis; Thermodynamics; Complexity;
    All these keywords.

    JEL classification:

    • B52 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Historical; Institutional; Evolutionary; Modern Monetary Theory;
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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