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Ecology, Economics, and Network Dynamics

Author

Listed:
  • Harold M. Hastings
  • Tai Young-Taft
  • Chih-Jui Tsen

Abstract

In a seminal 1972 paper, Robert M. May asked: "Will a Large Complex System Be Stable?" and argued that stability (of a broad class of random linear systems) decreases with increasing complexity, sparking a revolution in our understanding of ecosystem dynamics. Twenty-five years later, May, Levin, and Sugihara translated our understanding of the dynamics of ecological networks to the financial world in a second seminal paper, "Complex Systems: Ecology for Bankers." Just a year later, the US subprime crisis led to a near worldwide "great recession," spread by the world financial network. In the present paper we describe highlights in the development of our present understanding of stability and complexity in network systems, in order to better understand the role of networks in both stabilizing and destabilizing economic systems. A brief version of this working paper, focused on the underlying theory, appeared as an invited feature article in the February 2020 Society for Chaos Theory in Psychology and the Life Sciences newsletter (Hastings et al. 2020).

Suggested Citation

  • Harold M. Hastings & Tai Young-Taft & Chih-Jui Tsen, 2020. "Ecology, Economics, and Network Dynamics," Economics Working Paper Archive wp_971, Levy Economics Institute.
    • Handle: RePEc:lev:wrkpap:wp_971
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    More about this item

    Keywords

    Stability; Complexity; May-Wigner; Noise; Subprime Crisis; Liquidity Shock;
    All these keywords.

    JEL classification:

    • C02 - Mathematical and Quantitative Methods - - General - - - Mathematical Economics
    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
    • H12 - Public Economics - - Structure and Scope of Government - - - Crisis Management

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