Capital flow in a two-component dynamical system

TL;DR

This paper models open economic systems with producers and speculators, showing how increased speculator aggressivity leads to a transition from stable profits to risky regimes, with minimal price fluctuations near the transition.

Contribution

It introduces a numerical simulation model of open economics with two components, revealing the impact of speculator aggressivity on market stability and fluctuations.

Findings

Price fluctuations are minimized near the transition point.

Increased speculator aggressivity causes a shift to riskier regimes.

A transition from stable to risky profit regimes is observed.

Abstract

A model of open economics composed of producers and speculators is investigated by numerical simulations. The capital flows from the environment to the producers and from them to the speculators. The price fluctuations are suppressed by the speculators. When the aggressivity of the speculators grows, there is a transition from the regime with almost sure profit to a very risky regime in which very small fraction of speculators have stable gain. The minimum of price fluctuations occurs close to the transition.