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Punctuated Equilibrium and Power Law in Economic Dynamics

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  • Abhijit Kar Gupta

Abstract

An interesting toy model has recently been proposed on Schumpeterian economic dynamics by Thurner {\it et al.} following the idea of economist Joseph Schumpeter. Punctuated equilibrium dynamics is shown to emerge from this model and some detail analyses of the time series indicate SOC kind of behaviours. The focus in the present work is to toss the idea whether the dynamics can really be like a self organized critical (SOC) type. This study indicates that it is necessary to incorporate the concepts of 'fitness' and 'selection' in such a model in the line of the biological evolutionary model by Bak and Sneppen in order to obtain power law and thus SOC behaviour.

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  • Abhijit Kar Gupta, 2010. "Punctuated Equilibrium and Power Law in Economic Dynamics," Papers 1012.5896, arXiv.org.
    • Handle: RePEc:arx:papers:1012.5896
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    References listed on IDEAS

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    1. J. Doyne Farmer, 2002. "Market force, ecology and evolution," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 11(5), pages 895-953, November.
    2. Stefan Thurner & Peter Klimek & Rudolf Hanel, 2009. "Schumpeterian economic dynamics as a quantifiable minimum model of evolution," Papers 0909.3482, arXiv.org.
    3. Challet, Damien & Marsili, Matteo & Zhang, Yi-Cheng, 2013. "Minority Games: Interacting agents in financial markets," OUP Catalogue, Oxford University Press, number 9780199686698.
    4. Albert-László Barabási, 2005. "The origin of bursts and heavy tails in human dynamics," Nature, Nature, vol. 435(7039), pages 207-211, May.
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