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Full-Text Articles in Physical Sciences and Mathematics
Masked Instability: Within-Sector Financial Risk In The Presence Of Wealth Inequality, Youngna Choi
Masked Instability: Within-Sector Financial Risk In The Presence Of Wealth Inequality, Youngna Choi
Department of Applied Mathematics and Statistics Faculty Scholarship and Creative Works
We investigate masked financial instability caused by wealth inequality. When an economic sector is decomposed into two subsectors that possess a severe wealth inequality, the sector in entirety can look financially stable while the two subsectors possess extreme financially instabilities of opposite nature, one from excessive equity, the other from lack thereof. The unstable subsector can result in further financial distress and even trigger a financial crisis. The market instability indicator, an early warning system derived from dynamical systems applied to agent-based models, is used to analyze the subsectoral financial instabilities. Detailed mathematical analysis is provided to explain what financial …
A Primer On Noise-Induced Transitions In Applied Dynamical Systems, Eric Forgoston, Richard O. Moore
A Primer On Noise-Induced Transitions In Applied Dynamical Systems, Eric Forgoston, Richard O. Moore
Department of Applied Mathematics and Statistics Faculty Scholarship and Creative Works
Noise plays a fundamental role in a wide variety of physical and biological dynamical systems. It can arise from an external forcing or due to random dynamics internal to the system. It is well established that even weak noise can result in large behavioral changes such as transitions between or escapes from quasi-stable states. These transitions can correspond to critical events such as failures or extinctions that make them essential phenomena to understand and quantify, despite the fact that their occurrence is rare. This article will provide an overview of the theory underlying the dynamics of rare events for stochastic …