Endogenous crisis waves: a stochastic model with synchronized collective behavior

TL;DR

This paper introduces a stochastic model to explain synchronized crisis waves in macroeconomics and other systems, providing an exact phase diagram and demonstrating the robustness of the synchronization transition.

Contribution

The paper presents a simple, exactly solvable framework for understanding crisis wave synchronization, applicable across macroeconomic, physical, and biological systems.

Findings

Exact phase diagram of the model

Identification of the synchronization transition

Robustness of transition against noise and imperfections

Abstract

We propose a simple framework to understand commonly observed crisis waves in macroeconomic Agent Based models, that is also relevant to a variety of other physical or biological situations where synchronization occurs. We compute exactly the phase diagram of the model and the location of the synchronization transition in parameter space. Many modifications and extensions can be studied, confirming that the synchronization transition is extremely robust against various sources of noise or imperfections.