Mathematicians Develop Stress Test For Global Economy
From The Physics arXiv Blog
If China suffers a recession, how badly will the rest of the world be hit? Mathematicians have used network theory to calculate the answer
One of the rapidly growing applications of network science is the simulation of change in the real world. Ecologists, for example, are acutely interested in food webs and how the extinction of one species can have dramatic consequences for others.
The consequences of an extinction can be highly counterintuitive, such as triggering extinction cascades that wipe out many species, like an avalanche. This kind of phenomenon is impossible to test in the real world but it has recently become possible to study the consequences in silico, as we saw just a few weeks ago. .
What's more, biochemists are using the same process to see what happens when a protein is removed from a protein or metabolic network while computer scientists use it to measure how the world wide web would stand up to targeted attacks which remove certain nodes. It's an approach that has been remarkably successful.
So it should come as no surprise that economists might want to get in on the act. Today, they are beaten to this goal by a group of mathematicians at Dartmouth College in New Hampshire. Dan Rockmore and a couple of pals have recreated the world trade network from between 1870 and 2006 and then simulated what happens to it when certain countries become less active as might happen during a period of internal strife, or when they disappear entirely. They've also looked at what happens when the trade links between certain countries become broken as might happen during a war.