The Instability of Markets
AbstractRecent developments in the global liberalization of equity and currency markets, coupled to advances in trading technologies, are making markets increasingly interdependent. This increased fluidity raises questions about the stability of the international financial system. In this paper, we show that as couplings between stable markets grow, the likelihood of instabilities is increased, leading to a loss of general equilibrium as the system becomes increasingly large and diverse.
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- Brock, W.A., 1988. "Nonlinearity And Complex Dynamics In Economics And Finance," Working papers 360, Wisconsin Madison - Social Systems.
- Bernardo A. Huberman & Tad Hogg, 1995. "Distributed Computation as an Economic System," Journal of Economic Perspectives, American Economic Association, vol. 9(1), pages 141-152, Winter.
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