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Stock Market and Motion of a Variable Mass Spring

Listed author(s):
  • Enrique Canessa
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    We establish an analogy between the motion of spring whose mass increases linearly with time and volatile stock markets dynamics within an economic model based on simple temporal demand and supply functions [J. Phys. A: Math. Gen. 33, 3637 (2000)]. The total system energy E_t is shown to be proportional to a decreasing time dependent spring constant k_t. This model allows to derive log-periodicity cos[log (t-t_{c})] on commodity prices and oscillations (surplus and shortages) in the level of stocks. We also made an attempt to connect these results to the Tsallis statistics parameter q based on a possible force-entropy correlation [Physica A 341, 165 (2004)] and find that the Tsallis second entropic term \sum_{i=1}^{W} p_i^{q}/(q-1) relates to the square of the demand (or supply) function.

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    Paper provided by in its series Papers with number 0905.4450.

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    Date of creation: May 2009
    Publication status: Published in Physica A 388 (2009) 2168
    Handle: RePEc:arx:papers:0905.4450
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