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Register a new userExport dynamics as an optimal growth problem in the network of global economy
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We analyze export data aggregated at world global level of 219 classes of products over a period of 39 years. Our main goal is to set up a dynamical model to identify and quantify plausible mechanisms by which the evolutions of the various exports affect each other. This is pursued through a stochastic differential description, partly inspired by approaches used in population dynamics or directed polymers in random media. We outline a complex network of transfer rates which describes how resources are shifted between different product classes, and determines how casual favorable conditions for one export can spread to the other ones. A calibration procedure allows to fit four free model-parameters such that the dynamical evolution becomes consistent with the average growth, the fluctuations, and the ranking of the export values observed in real data. Growth crucially depends on the balance between maintaining and shifting resources to different exports, like in an explore-exploit problem. Remarkably, the calibrated parameters warrant a close-to-maximum growth rate under the transient conditions realized in the period covered by data, implying an optimal self organization of the global export. According to the model, major structural changes in the global economy take tens of years.
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Risks threatening modern societies form an intricately interconnected network that often underlies crisis situations. Yet, little is known about how risk materializations in distinct domains influence each other. Here we present an approach in which expert assessments of risks likelihoods and influence underlie a quantitative model of the global risk network dynamics. The modeled risks range from environmental to economic and technological and include difficult to quantify risks, such as geo-political or social. Using the maximum likelihood estimation, we find the optimal model parameters and demonstrate that the model including network effects significantly outperforms the others, uncovering full value of the expert collected data. We analyze the model dynamics and study its resilience and stability. Our findings include such risk properties as contagion potential, persistence, roles in cascades of failures and the identity of risks most detrimental to system stability. The model provides quantitative means for measuring the adverse effects of risk interdependence and the materialization of risks in the network.
The relation between network structure and dynamics is determinant for the behavior of complex systems in numerous domains. An important long-standing problem concerns the properties of the networks that optimize the dynamics with respect to a given performance measure. Here we show that such optimization can lead to sensitive dependence of the dynamics on the structure of the network. Specifically, using diffusively coupled systems as examples, we demonstrate that the stability of a dynamical state can exhibit sensitivity to unweighted structural perturbations (i.e., link removals and node additions) for undirected optimal networks and to weighted perturbations (i.e., small changes in link weights) for directed optimal networks. As mechanisms underlying this sensitivity, we identify discontinuous transitions occurring in the complement of undirected optimal networks and the prevalence of eigenvector degeneracy in directed optimal networks. These findings establish a unified characterization of networks optimized for dynamical stability, which we illustrate using Turing instability in activator-inhibitor systems, synchronization in power-grid networks, network diffusion, and several other network processes. Our results suggest that the network structure of a complex system operating near an optimum can potentially be fine-tuned for a significantly enhanced stability compared to what one might expect from simple extrapolation. On the other hand, they also suggest constraints on how close to the optimum the system can be in practice. Finally, the results have potential implications for biophysical networks, which have evolved under the competing pressures of optimizing fitness while remaining robust against perturbations.
We study in this paper the time evolution of stock markets using a statistical physics approach. Each agent is represented by a spin having a number of discrete states $q$ or continuous states, describing the tendency of the agent for buying or selling. The market ambiance is represented by a parameter $T$ which plays the role of the temperature in physics. We show that there is a critical value of $T$, say $T_c$, where strong fluctuations between individual states lead to a disordered situation in which there is no majority: the numbers of sellers and buyers are equal, namely the market clearing. We have considered three models: $q=3$ ( sell, buy, wait), $q=5$ (5 states between absolutely buy and absolutely sell), and $q=infty$. The specific measure, by the government or by economic organisms, is parameterized by $H$ applied on the market at the time $t_1$ and removed at the time $t_2$. We have used Monte Carlo simulations to study the time evolution of the price as functions of those parameters. Many striking results are obtained. In particular we show that the price strongly fluctuates near $T_c$ and there exists a critical value $H_c$ above which the boosting effect remains after $H$ is removed. This happens only if $H$ is applied in the critical region. Otherwise, the effect of $H$ lasts only during the time of the application of $H$. The second party of the paper deals with the price variation using a time-dependent mean-field theory. By supposing that the sellers and the buyers belong to two distinct communities with their characteristics different in both intra-group and inter-group interactions, we find the price oscillation with time.
This paper outlines a critical gap in the assessment methodology used to estimate the macroeconomic costs and benefits of climate policy. It shows that the vast majority of models used for assessing climate policy use assumptions about the financial system that sit at odds with the observed reality. In particular, the models assumptions lead to `crowding out of capital, which cause them to show negative impacts from climate policy in virtually all cases. We compare this approach with that of the E3ME model, which follows non-equilibrium economic theory and adopts a more empirical approach. While the non-equilibrium model also has limitations, its treatment of the financial system is more consistent with reality and it shows that green investment need not crowd out investment in other parts of the economy -- and may therefore offer an economic stimulus. The implication of this finding is that standard CGE models consistently over-estimate the costs of climate policy in terms of GDP and welfare, potentially by a substantial amount. These findings overly restrict the range of possible emission pathways accessible using climate policy from the viewpoint of the decision-maker, and may also lead to misleading information used for policy making. Improvements in both modelling approaches should be sought with some urgency -- both to provide a better assessment of potential climate policy and to improve understanding of the dynamics of the global financial system more generally.
Ground state entropy of the network source location problem is evaluated at both the replica symmetric level and one-step replica symmetry breaking level using the entropic cavity method. The regime that is a focus of this study, is closely related to the vertex cover problem with randomly quenched covered nodes. The resulting entropic message passing inspired decimation and reinforcement algorithms are used to identify the optimal location of sources in single instances of transportation networks. The conventional belief propagation without taking the entropic effect into account is also compared. We find that in the glassy phase the entropic message passing inspired decimation yields a lower ground state energy compared to the belief propagation without taking the entropic effect. Using the extremal optimization algorithm, we study the ground state energy and the fraction of frozen hubs, and extend the algorithm to collect statistics of the entropy. The theoretical results are compared with the extremal optimization results.
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