CCSS Meeting #51: Complex Economies are Fragile


This lecture will be in a hybrid format. We will welcome participants to the CCSS physically to watch the lecture in Minneartgebouw 4.16 and enjoy lunch & refreshments - please signup below. The lecture will be held on Zoom. The theme of this CCSS Lunch Meeting is Evolutionary Systems.

Speaker Overview

A graduate of the École Normale Supérieure, Jean-Philippe Bouchaud is President and Research Director of Capital Fund Management. He is a specialist in the statistical physics of disordered systems, and is one of the pioneers of “econophysics”, a discipline that seeks to apply the concepts and methods of physics to economic systems and financial markets. He is the author of more than three hundred and fifty scientific publications, including several books and journal articles. He received the CNRS silver medal in 1996 and the Quant of the Year prize in 2017 and 2018. He was elected to the French Academy of Sciences in 2018.

Lecture Overview

Will a large economy be stable? Building on Robert May’s original argument for large ecosystems, we conjecture that evolutionary and behavioural forces conspire to drive the economy at the border of instability. We study networks of firms in which inputs for production are not easily substitutable, as in several real-world supply chains. We argue that such networks generically become dysfunctional when their size increases, when the heterogeneity between firms becomes too strong, or when substitutability of their production inputs is reduced. At marginal stability and for large heterogeneities, we find that the distribution of firm sizes develops a power-law tail, as observed empirically. Crises can be triggered by small idiosyncratic shocks, which lead to “avalanches” of defaults characterized by a power-law distribution of total output losses. This scenario would naturally explain the well-known “small shocks, large business cycles” puzzle, as anticipated long ago by Bak, Chen, Scheinkman, and Woodford.

Meeting Details

There will be 45-min lecture from the speaker, followed by a 15-min Question & Answer session.

To attend the lecture (physically), please signup below. You can also watch the lecture online by clicking this this link on Tuesday 14th June at 12:00

Start date and time
End date and time
Link to Webinar (Zoom)
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Physical Lecture (Minnaertgebouw 4.16)