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The Economy as an Evolving Complex System, IIICurrent Perspectives and Future Directions$
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Lawrence E. Blume and Steven N. Durlauf

Print publication date: 2005

Print ISBN-13: 9780195162592

Published to Oxford Scholarship Online: October 2011

DOI: 10.1093/acprof:oso/9780195162592.001.0001

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Statistical Physics and Economic Fluctuations

Statistical Physics and Economic Fluctuations

Chapter:
(p.67) Statistical Physics and Economic Fluctuations
Source:
The Economy as an Evolving Complex System, III
Author(s):

H. Eugene Stanley

Xavier Gabaix

Parameswaran Gopikrishnan

Vasiliki Plerou

Publisher:
Oxford University Press
DOI:10.1093/acprof:oso/9780195162592.003.0005

To try to understand better puzzles regarding economic fluctuations, this chapter presents an overview of collaborative research between economists and physicists, which is focused on applying ideas of statistical physics. Describing outliers is one of the inquiries conducted to determine its existence. Outliers are phenomena that lie outside of patterns of statistical regularity. Evidence consistent with the possibility that such outliers may not exist is reviewed. This possibility is supported by the extensive numerical analysis of a huge database, containing every trade, which results in power-law descriptions of a number of quantities whose fluctuations are of interest. It is also supported by recent analysis of Plerou et al. of a database containing the bid, the ask, and the sale price of each trade of every stock. Further, the Plerou et al. analysis is consistent with a possible theoretical framework for understanding economic fluctuations.

Keywords:   economic fluctuations, economists, physicists, outliers, Plerou

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