Boom and bust in continuous time evolving economic model

TL;DR

This paper presents a spatially resolved economic model demonstrating how asynchronous updates lead to stable price oscillations driven by competition, speculation, and resource dynamics.

Contribution

It introduces a simple evolving economic model showing oscillatory behavior under asynchronous updating, highlighting the impact of competition and speculation on prices.

Findings

Stable oscillations in price emerge with asynchronous updates.

Price cycles are driven by competition and speculative invasion.

The model explains boom-bust dynamics in economic systems.

Abstract

We show that a simple model of a spatially resolved evolving economic system, which has a steady state under simultaneous updating, shows stable oscillations in price when updated asynchronously. The oscillations arise from a gradual decline of the mean price due to competition among sellers competing for the same resource. This lowers profitability and hence population but is followed by a sharp rise as speculative sellers invade the large un-inhabited areas. This cycle then begins again.