Making dynamic modelling effective in economics
AbstractMathematics has been extremely effective in physics, but not in economics beyond finance. To establish economics as science we should follow the Galilean method and try to deduce mathematical models of markets from empirical data, as has been done for financial markets. Financial markets are nonstationary. This means that 'value' is subjective. Nonstationarity also means that the form of the noise in a market cannot be postulated a priroi, but must be deduced from the empirical data. I discuss the essence of complexity in a market as unexpected events, and end with a biological speculation about market growth.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 2130.
Date of creation: Mar 2004
Date of revision:
Economics; fniancial markets; stochastic process; Markov process; complex systems;
Find related papers by JEL classification:
- C0 - Mathematical and Quantitative Methods - - General
- G0 - Financial Economics - - General
- A2 - General Economics and Teaching - - Economic Education and Teaching of Economics
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- A. P. Thirlwall, 1983. "Introduction," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 5(3), pages 341-344, April.
- Per Bak & Simon F. Norrelykke & Martin Shubik, 1998.
"The Dynamics of Money,"
cond-mat/9811094, arXiv.org, revised May 1999.
- A. Meltzer & Peter Ordeshook & Thomas Romer, 1983. "Introduction," Public Choice, Springer, vol. 41(1), pages 1-5, January.
- Gemunu H. Gunaratne & Joseph L. McCauley, 2002. "A theory for Fluctuations in Stock Prices and Valuation of their Options," Papers cond-mat/0209475, arXiv.org.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht).
If references are entirely missing, you can add them using this form.