Delayed information flow effect in economy systems. An ACP model study

Applying any strategy requires some knowledge about the past state of the system. Unfortunately in the case of economy collecting information is a difficult, expensive and time consuming process. Therefore the information about the system is known at the end of some well defined intervals, e. g. company reports, inflation data, GDP etc. They describe a (market) situation in the past. The time delay is specific to the market branch. It can be very short (e.g. stock market offer is updated every minute or so and this information is immediately available) or long, like months in the case of agricultural market, when the decisions are taken based on the results from the previous harvest. The analysis of the information flow delay can be based on the ACP model of spatial evolution of economic systems. The entities can move on a square lattice and when meeting take one of the two following decisions: merge or create a new entity. The decision is based on the system state, which is known with some time delay. The effect of system's feedback is investigated. We consider the case of company distribution evolution in a heterogenous field. The information flow time delay implies different final states, including cycles.Comment: Presented at APFA

Exponential and power-law probability distributions of wealth and income in the United Kingdom and the United States

We present the data on wealth and income distributions in the United Kingdom, as well as on the income distributions in the individual states of the USA. In all of these data, we find that the great majority of population is described by an exponential distribution, whereas the high-end tail follows a power law. The distributions are characterized by a dimensional scale analogous to temperature. The values of temperature are determined for the UK and the USA, as well as for the individual states of the USA.Comment: 8 pages, 6 figures, elsart.cls. Submitted to Physica A, proceedings of NATO workshop Applications of Physics in Economic Modeling, Prague, February 2001. V.2: minor stylistic expansio

A logistic map approach to economic cycles I. The best adapted companies

A birth-death lattice gas model about the influence of an environment on the fitness and concentration evolution of economic entities is analytically examined. The model can be mapped onto a high order logistic map. The control parameter is a (scalar) "business plan". Conditions are searched for growth and decay processes, stable states, upper and lower bounds, bifurcations, periodic and chaotic solutions. The evolution equation of the economic population for the best fitted companies indicates "microscopic conditions" for cycling. The evolution of a dynamic exponent is shown as a function of the business plan parameters.Comment: 10 pages, 5 postscript figure

Influence of information flow in the formation of economic cycles

A microscopic approach to macroeconomic features is intended. A model for macroeconomic behavior based on the Ausloos-Clippe-Pekalski model is built and investigated. The influence of a discrete time information transfer is investigated. The formation of economic cycles is observed as a function of the time of information delay. Three regions of delay time are recognized: short $t_d \in (2 IS, 4 IS)$ (IS - iteration steps) - the system evolves toward a unique stable equilibrium state, medium $t_d =5 IS$ or $t_d =6 IS$, the system undergoes oscillations: stable concentration cycles appear in the system. For long information flow delay times, $t_d \geq 7$, the systems may crash for most initial concentrations. However, even in the case of long delay time the crash time may be long enough to allow observation of the system evolution and to introduce an appropriate strategy in order to avoid the collapse of the e.g. company concentration. In the long time delay it is also possible to observe an "economy resonance" where despite a long delay time the system evolves for a long time or can even reach a stable state, which insures its existence.Comment: 18 pages,16 figures, to be published in Verhulst 200 Proceedings, M. Ausloos and M. Dirickx, Eds. (in press

Model of macroeconomic evolution in stable regionally dependent economic fields

We develop a model for the evolution of economic entities within a geographical type of framework. On a square symmetry lattice made of three (economic) regions, firms, described by a scalar fitness, are allowed to move, adapt, merge or create spin-offs under predetermined rules, in a space and time dependent economic environment. We only consider here one timely variation of the ''external economic field condition''. For the firm fitness evolution we take into account a constraint such that the disappearance of a firm modifies the fitness of nearest neighboring ones, as in Bak-Sneppen population fitness evolution model. The concentration of firms, the averaged fitness, the regional distribution of firms, and fitness for different time moments, the number of collapsed, merged and new firms as a function of time have been recorded and are discussed. Also the asymptotic values of the number of firms present in the three regions together with their average fitness, as well as the number of respective births and collapses in the three regions are examined. It appears that a sort of $critical$ selection pressure exists. A power law dependence, signature of self-critical organization is seen in the birth and collapse asymptotic values for a high selection pressure only. A lack of self-organization is also seen at region borders.Comment: 11 figures double columns on 7 page

Financialization and the monetary circuit : a macro-accounting approach

This paper aims to cross-breed the standard monetary circuit accounting model with elements from the Post-Keynesian literature. The goals are: (i) to analyse the implications of credit-based household consumption fed by capital asset inflation for the soundness of a pure credit-money economy of production; and (ii) to provide a more sophisticated description of the working of modern financial systems than the one grounded in the usual 'bank-based vs. market based' distinction

Evidence and Ideology in Macroeconomics: The Case of Investment Cycles

The paper reports the principal findings of a long term research project on the description and explanation of business cycles. The research strongly confirmed the older view that business cycles have large systematic components that take the form of investment cycles. These quasi-periodic movements can be represented as low order, stochastic, dynamic processes with complex eigenvalues. Specifically, there is a fixed investment cycle of about 8 years and an inventory cycle of about 4 years. Maximum entropy spectral analysis was employed for the description of the cycles and continuous time econometrics for the explanatory models. The central explanatory mechanism is the second order accelerator, which incorporates adjustment costs both in relation to the capital stock and the rate of investment. By means of parametric resonance it was possible to show, both theoretically and empirically how cycles aggregate from the micro to the macro level. The same mathematical tool was also used to explain the international convergence of cycles. I argue that the theory of investment cycles was abandoned for ideological, not for evidential reasons. Methodological issues are also discussed

Science and Ideology in Economic, Political, and Social Thought

This paper has two sources: One is my own research in three broad areas: business cycles, economic measurement and social choice. In all of these fields I attempted to apply the basic precepts of the scientific method as it is understood in the natural sciences. I found that my effort at using natural science methods in economics was met with little understanding and often considerable hostility. I found economics to be driven less by common sense and empirical evidence, then by various ideologies that exhibited either a political or a methodological bias, or both. This brings me to the second source: Several books have appeared recently that describe in historical terms the ideological forces that have shaped either the direct areas in which I worked, or a broader background. These books taught me that the ideological forces in the social sciences are even stronger than I imagined on the basis of my own experiences. The scientific method is the antipode to ideology. I feel that the scientific work that I have done on specific, long standing and fundamental problems in economics and political science have given me additional insights into the destructive role of ideology beyond the history of thought orientation of the works I will be discussing

The effects of financialisation and financial development on investment: Evidence from firm-level data in Europe

In this paper we estimate the effects of financialization on physical investment in selected western European countries using panel data based on the balance-sheets of publicly listed non-financial companies (NFCs) supplied by Worldscope for the period 1995-2015. We find robust evidence of an adverse effect of both financial payments (interests and dividends) and financial incomes on investment in fixed assets by the NFCs. This finding is robust for both the pool of all Western European firms and single country estimations. The negative impacts of financial incomes are non-linear with respect to the companies’ size: financial incomes crowd-out investment in large companies, and have a positive effect on the investment of only small, relatively more credit-constrained companies. Moreover, we find that a higher degree of financial development is associated with a stronger negative effect of financial incomes on companies’ investment. This finding challenges the common wisdom on ‘finance-growth nexus’. Our findings support the ‘financialization thesis’ that the increasing orientation of the non-financial sector towards financial activities is ultimately leading to lower physical investment, hence to stagnant or fragile growth, as well as long term stagnation in productivity