| Entropies of Negative Incomes, Pareto-Distributed Loss, and Financial Crises | |
Gao JB(高剑波) ; Hu J; Mao X; Zhou M; Gurbaxani B; Lin J; Gao, JB (reprint author), PMB Intelligence LLC, W Lafayette, IN 47996 USA
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| Source Publication | PLOS One
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| 2011 | |
| Volume | 6Issue:10Pages:e25053 |
| ISSN | 1932-6203 |
| Abstract | Health monitoring of world economy is an important issue, especially in a time of profound economic difficulty world-wide. The most important aspect of health monitoring is to accurately predict economic downturns. To gain insights into how economic crises develop, we present two metrics, positive and negative income entropy and distribution analysis, to analyze the collective "spatial'' and temporal dynamics of companies in nine sectors of the world economy over a 19 year period from 1990-2008. These metrics provide accurate predictive skill with a very low false-positive rate in predicting downturns. The new metrics also provide evidence of phase transition-like behavior prior to the onset of recessions. Such a transition occurs when negative pretax incomes prior to or during economic recessions transition from a thin-tailed exponential distribution to the higher entropy Pareto distribution, and develop even heavier tails than those of the positive pretax incomes. These features propagate from the crisis initiating sector of the economy to other sectors. |
| Keyword | Social Phase-transitions Law Economics Markets |
| Subject Area | Life Sciences & Biomedicine - Other Topics |
| DOI | 10.1371/journal.pone.0025053 |
| URL | 查看原文 |
| Indexed By | SCI |
| Language | 英语 |
| WOS ID | WOS:000295943000009 |
| WOS Keyword | SOCIAL PHASE-TRANSITIONS ; LAW ; ECONOMICS ; MARKETS |
| WOS Research Area | Science & Technology - Other Topics |
| WOS Subject | Multidisciplinary Sciences |
| Funding Organization | This work is partially supported by the State Key Laboratory of Non-linear Mechanics (LNM), Institute of Mechanics, Chinese Academy of Sciences, Beijing, People's Republic of China. The funders had no role in study design, data collection and analysis, decision to publish, or preparation of the manuscript. |
| Classification | 二类/Q1 |
| Citation statistics | |
| Document Type | 期刊论文 |
| Identifier | http://dspace.imech.ac.cn/handle/311007/44901 |
| Collection | 非线性力学国家重点实验室 |
| Corresponding Author | Gao, JB (reprint author), PMB Intelligence LLC, W Lafayette, IN 47996 USA |
| Recommended Citation GB/T 7714 | Gao JB,Hu J,Mao X,et al. Entropies of Negative Incomes, Pareto-Distributed Loss, and Financial Crises[J]. PLOS One,2011,6,10,:e25053. |
| APA | 高剑波.,Hu J.,Mao X.,Zhou M.,Gurbaxani B.,...&Gao, JB .(2011).Entropies of Negative Incomes, Pareto-Distributed Loss, and Financial Crises.PLOS One,6(10),e25053. |
| MLA | 高剑波,et al."Entropies of Negative Incomes, Pareto-Distributed Loss, and Financial Crises".PLOS One 6.10(2011):e25053. |
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