Punctuated Equilibrium and Power Law in Economic Dynamics

Details Punctuated Equilibrium and Power Law in Economic Dynamics Punctuated Equilibrium and Power Law in Economic Dynamics

2010-12-29

arxiv.org/abs/1012.5896v1

Economy

Quantitative Finance

General Finance

7 pages, 3 figs

Scientific paper

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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