IDEAS home Printed from https://ideas.repec.org/a/spr/eurphb/v94y2021i10d10.1140_epjb_s10051-021-00218-4.html
   My bibliography  Save this article

Searching for the physical origin of bifurcations in non-equilibrium economy

Author

Listed:
  • Kun Zhang

    (University of Science and Technology of China
    Chinese Academy of Sciences)

  • Erkang Wang

    (University of Science and Technology of China
    Chinese Academy of Sciences)

  • Jin Wang

    (Stony Brook University
    Stony Brook University
    Stony Brook University)

Abstract

The economy is never in equilibrium despite the fact that most of the studies is focused on equilibrium economy. The nonequilibrium economy shows abrupt changes such as bifurcation and catastrophe from time to time in the examples of financial market breakdown and economic crisis in recent years. In this study, we explore the physical origin of the bifurcation and catastrophe of the non-equilibrium economic systems based on our landscape and flux theory. From the underlying nonlinear supply-demand dynamics, both the bistability and limit cycle oscillations can appear. The transformation or bifurcation from bi-stability to limit cycle oscillation or vice versa can occur upon changing the slope of demand curve. The transformation of bifurcation of the monostable state of monopoly or competition to either the bistability of monopoly and competition or coherent limit cycle oscillation between monopoly and competition can appear upon parallel shifting the demand curve. We show that the average flux of the driving force can provide a dynamical origin for the bifurcation/catastrophe of the nonequilibrium economy while the dissipation cost characterized by the entropy production rate can provide a thermodynamic origin for the bifurcation/catastrophe of the nonequilibrium economy. The average flux and dissipation cost can then be used as indicators of critical points for the emergence of bifurcation and catastrophe. These quantitative measures may be used to predict crisis and catastrophe in the non-equilibrium economic system. Graphic abstract

Suggested Citation

  • Kun Zhang & Erkang Wang & Jin Wang, 2021. "Searching for the physical origin of bifurcations in non-equilibrium economy," The European Physical Journal B: Condensed Matter and Complex Systems, Springer;EDP Sciences, vol. 94(10), pages 1-9, October.
  • Handle: RePEc:spr:eurphb:v:94:y:2021:i:10:d:10.1140_epjb_s10051-021-00218-4
    DOI: 10.1140/epjb/s10051-021-00218-4
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1140/epjb/s10051-021-00218-4
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.

    File URL: https://libkey.io/10.1140/epjb/s10051-021-00218-4?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Mas-Colell, Andreu, 1986. "The Price Equilibrium Existence Problem in Topological Vector Lattice s," Econometrica, Econometric Society, vol. 54(5), pages 1039-1053, September.
    2. Steve Keen, 1995. "Finance and Economic Breakdown: Modeling Minsky’s “Financial Instability Hypothesis”," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 17(4), pages 607-635, July.
    3. Zhang, Kun & Wang, Jin, 2017. "Landscape and flux theory of non-equilibrium open economy," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 482(C), pages 189-208.
    4. Bonanno, Giacomo, 1987. "Monopoly Equilibria and Catastrophe Theory," Australian Economic Papers, Wiley Blackwell, vol. 26(49), pages 197-215, December.
    5. Beckmann, Martin J & Ryder, Harl E, Jr, 1969. "Simultaneous Price and Quantity Adjustment in a Single Market," Econometrica, Econometric Society, vol. 37(3), pages 470-484, July.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Zhang, Kun & Wang, Jin, 2017. "Landscape and flux theory of non-equilibrium open economy," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 482(C), pages 189-208.
    2. Aliprantis, Charalambos D. & Florenzano, Monique & Tourky, Rabee, 2005. "Linear and non-linear price decentralization," Journal of Economic Theory, Elsevier, vol. 121(1), pages 51-74, March.
    3. Engelbert Stockhammer & Giorgos Gouzoulis & Rob Calvert Jump, 2019. "Debt-driven business cycles in historical perspective: The cases of the USA (1889-2015) and UK (1882-2010)," Working Papers PKWP1907, Post Keynesian Economics Society (PKES).
    4. Besada, M. & Vazquez, C., 1999. "The generalized marginal rate of substitution," Journal of Mathematical Economics, Elsevier, vol. 31(4), pages 553-560, May.
    5. Basile, Achille & Graziano, Maria Gabriella & Papadaki, Maria & Polyrakis, Ioannis A., 2017. "Cones with semi-interior points and equilibrium," Journal of Mathematical Economics, Elsevier, vol. 71(C), pages 36-48.
    6. Engelbert Stockhammer & Rafael Wildauer, 2016. "Debt-driven growth? Wealth, distribution and demand in OECD countries," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 40(6), pages 1609-1634.
    7. Charalambos Aliprantis & Kim Border & Owen Burkinshaw, 1996. "Market economies with many commodities," Decisions in Economics and Finance, Springer;Associazione per la Matematica, vol. 19(1), pages 113-185, March.
    8. Rozite, Kristiana & Bezemer, Dirk J. & Jacobs, Jan P.A.M., 2019. "Towards a financial cycle for the U.S., 1973–2014," The North American Journal of Economics and Finance, Elsevier, vol. 50(C).
    9. Nizar Allouch & Monique Florenzano, 2004. "Edgeworth and Walras equilibria of an arbitrage-free exchange economy," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 23(2), pages 353-370, January.
    10. Tourky, Rabee, 1999. "Production equilibria in locally proper economies with unbounded and unordered consumers," Journal of Mathematical Economics, Elsevier, vol. 32(3), pages 303-315, November.
    11. Dirk J. Bezemer, 2011. "Who Predicted the Crisis and What Can We Learn from Them?," Chapters, in: Óscar Dejuán & Eladio Febrero & Maria Cristina Marcuzzo (ed.), The First Great Recession of the 21st Century, chapter 1, Edward Elgar Publishing.
    12. Dilip B. Madan, 2018. "Financial equilibrium with non-linear valuations," Annals of Finance, Springer, vol. 14(2), pages 211-221, May.
    13. William R. White, 2013. "Is Monetary Policy a Science? The Interaction of Theory and Practice over the Last 50 Years," SUERF 50th Anniversary Volume Chapters, in: Morten Balling & Ernest Gnan (ed.), 50 Years of Money and Finance: Lessons and Challenges, chapter 3, pages 73-116, SUERF - The European Money and Finance Forum.
    14. Khan, M. Ali & Tourky, Rabee & Vohra, Rajiv, 1999. "The supremum argument in the new approach to the existence of equilibrium in vector lattices," Economics Letters, Elsevier, vol. 63(1), pages 61-65, April.
    15. Moura, N.J. & Ribeiro, Marcelo B., 2013. "Testing the Goodwin growth-cycle macroeconomic dynamics in Brazil," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 392(9), pages 2088-2103.
    16. Ostroy, Joseph M & Zame, William R, 1994. "Nonatomic Economies and the Boundaries of Perfect Competition," Econometrica, Econometric Society, vol. 62(3), pages 593-633, May.
    17. Stewart, Robert & Chowdhury, Murshed & Arjoon, Vaalmikki, 2021. "Interdependencies between regulatory capital, credit extension and economic growth," Journal of Economics and Business, Elsevier, vol. 117(C).
    18. Luisa Montuschi & Omar Chisari, 2016. "En memoria de Julio H. G. Olivera (1929 – 2016)," Económica, Instituto de Investigaciones Económicas, Facultad de Ciencias Económicas, Universidad Nacional de La Plata, vol. 0(1), pages 3-21, January-D.
    19. Solomon Sorin & Golo Natasa, 2013. "Minsky Financial Instability, Interscale Feedback, Percolation and Marshall–Walras Disequilibrium," Accounting, Economics, and Law: A Convivium, De Gruyter, vol. 3(3), pages 167-260, October.
    20. Anna Martellotti, 2007. "Core equivalence theorem: countably many types of agents and commodities in $\vec{L}^{1}(\mu)$," Decisions in Economics and Finance, Springer;Associazione per la Matematica, vol. 30(1), pages 51-70, May.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:eurphb:v:94:y:2021:i:10:d:10.1140_epjb_s10051-021-00218-4. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.