Summary
International Symposium on Nonlinear Theory and its Applications
2005
Session Number:3-1-2
Session:
Number:3-1-2-6
Periodic economic cycles: the effect of evolution towards criticality, and control
M. Christen, Th. Ott, A. Kern, N. Stoop, R. Stoop,
pp.553-556
Publication Date:2005/10/18
Online ISSN:2188-5079
Summary:
When a system becomes unstable or noise becomes excessive, often regulations of the form of limiters (barriers obstructing an excursion into undesired directions) are imposed. It is hoped that by the influence of this element, the system can be calmed and its behavior optimized. We consider a simple noisy nonlinear economics model that self-organizes towards criticality. We demonstrate that the inherent effect of limiters is the emergence of stable cycles, and that the limiters need to be implemented with care in order to obtain an optimized system response. In particular, implementing the limiter at maximal system response is generally a suboptimal solution. We find that the system average is generally optimized by controlling a period-one cycle. Furthermore, we provide optimality conditions for the case that the control is restricted to be on the natural system behavior.