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The Instability of Markets

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  • T. Hogg
  • B. A. Huberman
  • M. Youssefmir

Abstract

Recent 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.

Suggested Citation

  • T. Hogg & B. A. Huberman & M. Youssefmir, "undated". "The Instability of Markets," Working Papers _006, Xerox Research Park.
    • Handle: RePEc:wop:xeroxp:_006
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    File URL: ftp://parcftp.xerox.com/pub/dynamics/markets.ps
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    References listed on IDEAS

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    1. 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.
    2. Brock, W.A., 1988. "Nonlinearity And Complex Dynamics In Economics And Finance," Working papers 360, Wisconsin Madison - Social Systems.
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