Averting worse economic collapses

A new study shows how specific parameters can help us steer clear of tipping points in dynamic systems, such as entire economies

2013-06-25

(Press-News.org) By managing macro-economic parameters, scientists believe that—unlike previously thought—it is possible to steer an economy around irreversible changes in its complex dynamics and avert potential economic disasters. These findings, about to be published in EPJ B, stem from the theoretical work of Michael Harré and colleagues at the Complex Systems Group at the University of Sydney, Australia.

Physicists have a long experience of using statistical mechanics to study equilibrium points and small fluctuations in large numbers of interacting particles under varying pressure and temperature conditions. By applying statistical-mechanics methods to economic game theory, it is possible to describe the strategic interactions between, say, businesses which are influenced by their own incentives as well as the incentives of third parties.

By changing a macro-economic parameter like tax rates, previous research has shown the system will usually move away a little from where it had settled, but not much. Their new results show that such optimisation can produce a tipping point where a change in the tax regime, for example, will cause the whole economy to suddenly collapse.

Harré and colleagues found that it is possible to find a steady state in the specific scenario where the contributions each business makes to the whole economy are maximised in terms of financial return. And even if an economy is drifting inexorably towards a tipping point, they showed that small perturbations of the system parameters can move an economy around a tipping point, thus averting it.

The ability to exert control on economies depends on having sufficient control of the system parameters—potentially addressed by empirical research, and knowing where the economy is relative to these tipping points—provided by recent measuring techniques.

### Reference M. S. Harré, S. R. Atkinson, and L. Hossain (2013), Simple Nonlinear Systems and Navigating Catastrophes, European Physical Journal B, DOI 10.1140/epjb/e2013-31064-x

For more information visit: http://www.epj.org

The full-text article is available to journalists on request.

ELSE PRESS RELEASES FROM THIS DATE:

Spatial training boosts math skills

2013-06-25

EAST LANSING, Mich. — Training young children in spatial reasoning can improve their math performance, according to a groundbreaking study from Michigan State University education scholars. The researchers trained 6- to 8-year-olds in mental rotation, a spatial ability, and found their scores on addition and subtraction problems improved significantly. The mental rotation training involved imagining how two halves of an object would come together to make a whole, when the halves have been turned at an angle. Past research has found a link between spatial reasoning and ...

New laser shows what substances are made of; could be new eyes for military

2013-06-25

ANN ARBOR – A new laser that can show what objects are made of could help military aircraft identify hidden dangers such as weapons arsenals far below. "For the defense and intelligence communities, this could add a new set of eyes," said Mohammed Islam, a professor of electrical engineering and computer science and biomedical engineering at the University of Michigan. The system, which is made of off-the-shelf telecommunications technology, emits a broadband beam of infrared light. While most lasers emit light of one wavelength, or color, super-continuum lasers like ...

MS researchers determine that brain reserve independently protects against cognitive decline in MS

2013-06-25

West Orange, NJ. June 24, 2013. U.S. and Italian researchers have determined that brain reserve, as well as cognitive reserve, independently protects against cognitive decline in multiple sclerosis (MS). Their article, "Brain reserve and cognitive reserve in multiple sclerosis: What you've got and how you use it", was published in Neurology on June 11, 2013 (Neurology 2013;80:2186-2193). Authors James Sumowski, PhD, Victoria Leavitt, PhD, and John DeLuca, PhD, are with Kessler Foundation in West Orange, NJ. Maria Rocca, MD, Gianna Riccitelli, PhD, Giancarlo Comi, MD, ...

Policy issues plague hydropower as wind power backup

2013-06-25

Theoretically, hydropower can step in when wind turbines go still, but barriers to this non-polluting resource serving as a backup are largely policy- and regulation-based, according to Penn State researchers. "We have a very clear realization that we need to make energy systems more sustainable," said Seth A. Blumsack, assistant professor of energy policy. "We want to reduce the environmental footprint -- carbon dioxide and conventional pollutants." Americans also expect to have the system continue to work exactly as it is without blackouts and with low cost electricity. ...

Hunger affects decision making and perception of risk

2013-06-25

This news release is available in German. Hungry people are often difficult to deal with. A good meal can affect more than our mood, it can also influence our willingness to take risks. This phenomenon is also apparent across a very diverse range of species in the animal kingdom. Experiments conducted on the fruit fly, Drosophila, by scientists at the Max Planck Institute of Neurobiology in Martinsried have shown that hunger not only modifies behaviour, but also changes pathways in the brain. Animal behaviour is radically affected by the availability and amount ...

Study identifies protein that contributes to cognitive decline in Alzheimer's

2013-06-25

NEW YORK, NY (June 25, 2013) — Researchers at Columbia University Medical Center (CUMC) have demonstrated that a protein called caspase-2 is a key regulator of a signaling pathway that leads to cognitive decline in Alzheimer's disease. The findings, made in a mouse model of Alzheimer's, suggest that inhibiting this protein could prevent the neuronal damage and subsequent cognitive decline associated with the disease. The study was published this month in the online journal Nature Communications. One of the earliest events in Alzheimer's is disruption of the brain's synapses ...

High-octane bacteria could ease pain at the pump

2013-06-25

June 25, 2013 — New lines of engineered bacteria can tailor-make key precursors of high-octane biofuels that could one day replace gasoline, scientists at the Wyss Institute for Biologically Inspired Engineering at Harvard University and the Department of Systems Biology at Harvard Medical School report in the June 24 online edition of Proceedings of the National Academy of Sciences. The same lines can also produce precursors of pharmaceuticals, bioplastics, herbicides, detergents, and more. "The big contribution is that we were able to program cells to make specific ...

Clearing up confusion on future of Colorado River flows

2013-06-25

The Colorado River provides water for more than 30 million people, including those in the fast-growing cities of Las Vegas, Phoenix and Los Angeles. Increasing demand for that water combined with reduced flow and the looming threat of climate change have prompted concern about how to manage the basin's water in coming decades. In the past five years, scientific studies estimated declines of future flows ranging from 6 percent to 45 percent by 2050. A paper by University of Washington researchers and co-authors at eight institutions across the West aims to explain this ...

Kids' reading success boosted by long-term individualized instruction

2013-06-25

Students who consistently receive individualized reading instruction from first through third grade become better readers than those who don't, according to new research published in Psychological Science, a journal of the Association for Psychological Science. These findings come after a three-year study that followed several hundred Floridian students, who received varying amounts of individualized instruction, from first to third grade. "Our results show that children need sustained, effective instruction from first through third grade if they are going to become ...

First-ever therapeutic offers hope for improving blood transfusions

2013-06-25

Researchers from Case Western Reserve University School of Medicine have developed an unprecedented approach to restore nitric oxide (NO) to donated blood, a breakthrough that could dramatically reduce harmful effects from transfusions. Jonathan Stamler, MD, and colleagues from Case Western Reserve School of Medicine and from Duke University Medical Center describe their findings in the June 24 issue of PNAS: Proceedings of the National Academy of Sciences of the United States of America. Stamler and his colleagues report that restoring blood levels of NO in animals ...

LAST 30 PRESS RELEASES:

AI finds undiagnosed liver disease in early stages

The American Society of Tropical Medicine and Hygiene and the Bill & Melinda Gates Foundation announce new research fellowship in malaria genomics in honor of professor Dominic Kwiatkowski