2011/07/31 by Eric Kemp‐Benedict, Kemp-Benedict, Eric
Economics, Econometrics and Finance · Physics and Astronomy · #Advanced Thermodynamics and Statistical Mechanics #Complex Systems and Time Series Analysis #Economic theories and models #FOS: Economics and business #FOS: Physical sciences #General Finance (q-fin.GN) #Physics and Society (physics.soc-ph)
paper · pdf · doi:10.48550/arxiv.1108.0188
openalex publication_date 2011/07/31 · openalex created_date 2025/10/24 · openalex updated_date 2026/07/28
This paper proposes an alternative to the classical price-adjustment\nmechanism (called "t atonnement" after Walras) that is second-order in time.\nThe proposed mechanism, an analogue to the damped harmonic oscillator, provides\na dynamic equilibration process that depends only on local information. We show\nhow such a process can result from simple behavioural rules. The discrete-time\nform of the model can result in two-step limit cycles, but as the distance\ncovered by the cycle depends on the size of the damping, the proposed mechanism\ncan lead to both highly unstable and relatively stable behaviour, as observed\nin real economies.\n