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Scaling Laws In The Macroeconomy

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Author Info

  • D. DELLI GATTI

    (Institute of Quantitative Methods and Economic Theory, Catholic University of Milan, Largo Gemelli 1, I-20123 Milano, Italy)

  • C. DI GUILMI

    (Department of Economics, Università Politecnica delle Marche, Piazzale Martelli 8, I-60100 Ancona, Italy)

  • M. GALLEGATI

    ()
    (Department of Economics, Università Politecnica delle Marche, Piazzale Martelli 8, I-60100 Ancona, Italy)

  • E. GAFFEO

    ()
    (Department of Economics and CEEL, University of Trento, Via Inama 5, I-38100 Trento, Italy)

  • G. GIULIONI

    (Department of Quantitative Methods and Economic Theory, "G. D'Annunzio" University of Chieti-Pescara, Via Pindaro 42, I-65127 Pescara, Italy)

  • A. PALESTRINI

    (Department of Law in History and Society, University of Teramo, Via Crucioli 122, I-64100 Teramo, Italy)

Abstract

The practice of detecting power laws and scaling behaviors in economics and finance has gained momentum in the last few years, due to the increased use of concepts and methods first developed in statistical physics. Some disappointment has emerged in the economic profession, however, as regards the models proposed so far to theoretically explain these phenomena. In this paper we aim to address this criticism, showing that scaling behaviors can naturally emerge in a multiagent system with optimizing interacting units characterized by financial fragility.

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Bibliographic Info

Article provided by World Scientific Publishing Co. Pte. Ltd. in its journal Advances in Complex Systems.

Volume (Year): 11 (2008)
Issue (Month): 01 ()
Pages: 131-138

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Handle: RePEc:wsi:acsxxx:v:11:y:2008:i:01:p:131-138

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Related research

Keywords: Scaling laws; business fluctuations; agent-based models;

References

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  1. Gatti, Domenico Delli & Guilmi, Corrado Di & Gaffeo, Edoardo & Giulioni, Gianfranco & Gallegati, Mauro & Palestrini, Antonio, 2005. "A new approach to business fluctuations: heterogeneous interacting agents, scaling laws and financial fragility," Journal of Economic Behavior & Organization, Elsevier, vol. 56(4), pages 489-512, April.
  2. Xavier Gabaix, 2005. "The Granular Origins of Aggregate Fluctuations," 2005 Meeting Papers 470, Society for Economic Dynamics.
  3. Youngki Lee & Luis A. N. Amaral & David Canning & Martin Meyer & H. Eugene Stanley, 1998. "Universal features in the growth dynamics of complex organizations," Science & Finance (CFM) working paper archive cond-mat/9804100, Science & Finance, Capital Fund Management.
  4. Gaffeo, Edoardo & Gallegati, Mauro & Palestrini, Antonio, 2003. "On the size distribution of firms: additional evidence from the G7 countries," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 324(1), pages 117-123.
  5. Bruce C. Greenwald & Joseph E. Stiglitz, 1993. "Financial Market Imperfections and Business Cycles," NBER Working Papers 2494, National Bureau of Economic Research, Inc.
  6. Di Guilmi, Corrado & Gaffeo, Edoardo & Gallegati, Mauro, 2004. "Empirical results on the size distribution of business cycle phases," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 333(C), pages 325-334.
  7. Okuyama, K & Takayasu, M & Takayasu, H, 1999. "Zipf's law in income distribution of companies," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 269(1), pages 125-131.
  8. L. A. N. Amaral & S. V. Buldyrev & S. Havlin & H. Leschhorn & P. Maass & M. A. Salinger & H. E. Stanley & M. H. R. Stanley, 1997. "Scaling behavior in economics: I. Empirical results for company growth," Science & Finance (CFM) working paper archive cond-mat/9702082, Science & Finance, Capital Fund Management.
  9. Alan P. Kirman, 1992. "Whom or What Does the Representative Individual Represent?," Journal of Economic Perspectives, American Economic Association, vol. 6(2), pages 117-136, Spring.
  10. Delli Gatti, Domenico & Di Guilmi, Corrado & Gaffeo, Edoardo & Gallegati, Mauro, 2004. "Bankruptcy as an exit mechanism for systems with a variable number of components," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 344(1), pages 8-13.
  11. Brock, W A, 1999. "Scaling in Economics: A Reader's Guide," Industrial and Corporate Change, Oxford University Press, vol. 8(3), pages 409-46, September.
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Cited by:
  1. Delli Gatti, Domenico & Di Guilmi, Corrado & Gaffeo, Edoardo & Gallegati, Mauro, 2004. "Bankruptcy as an exit mechanism for systems with a variable number of components," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 344(1), pages 8-13.

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