Berlin 2024 – wissenschaftliches Programm

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SOE: Fachverband Physik sozio-ökonomischer Systeme

SOE 25: Economic Networks

SOE 25.3: Vortrag

Freitag, 22. März 2024, 11:30–11:45, MA 001

Hysteresis of Activities of the Network of Firms During the Economic Downturns — •Ali Hosseiny — Department of Physics, Shahid Beheshti University, Tehran, Iran

During the great recession in 2008 and 2009, when Obama's administration proposed its stimulation bill, some prominent economists such as Noble laureates, Joseph Stiglitz and Paul Krugman claimed that Obama's bill might not be big enough to lead the economy to overcome the recession. Now, a question arises: Does the economy show hysteresis over recession so that a minimum size of stimulation is needed to overcome recession? To answer this question we state that the activity of firms in their trade network is correlated. If a firm decreases or increases its activity, then its trade partners are forced to do so.

It can be shown that the interaction of firms results in hysteresis. Such a hysteresis resists government stimulation of the economy. Hysteresis analysis provides a correct prediction about the outcome of the fiscal stimulation in the US and the EU. In the aftermath recession of the economic crisis of 2009, the bill imposed by Obama was greater than the hysteresis of the market and thereby successful. The European Union*s bill however was below the hysteresis of the market and unsuccessful.

Keywords: Agent based models; network of firms; economic crisis; economic stimulation