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Employment, Production and Consumption model: Patterns of phase transitions

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  • Lavička, H.
  • Lin, L.
  • Novotný, J.

Abstract

We have simulated the model of Employment, Production and Consumption (EPC) using Monte Carlo. The EPC model is an agent based model that mimics very basic rules of industrial economy. From the perspective of physics, the nature of the interactions in the EPC model represents multi-agent interactions where the relations among agents follow the key laws for circulation of capital and money. Monte Carlo simulations of the stochastic model reveal phase transition in the model economy. The two phases are the phase with full unemployment and the phase with nearly full employment. The economy switches between these two states suddenly as a reaction to a slight variation in the exogenous parameter, thus the system exhibits strong non-linear behavior as a response to the change of the exogenous parameters.

Suggested Citation

  • Lavička, H. & Lin, L. & Novotný, J., 2010. "Employment, Production and Consumption model: Patterns of phase transitions," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 389(8), pages 1708-1720.
    • Handle: RePEc:eee:phsmap:v:389:y:2010:i:8:p:1708-1720
    DOI: 10.1016/j.physa.2009.12.046
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    References listed on IDEAS

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    1. Lavička, H. & Lichard, T. & Novotný, J., 2016. "Sand in the wheels or wheels in the sand? Tobin taxes and market crashes," International Review of Financial Analysis, Elsevier, vol. 47(C), pages 328-342.

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