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Policy Forum
Complex Systems

Complexity theory and financial regulation

Economic policy needs interdisciplinary network analysis and behavioral modeling
Science
19 Feb 2016
Vol 351, Issue 6275
pp. 818-819

Abstract

Traditional economic theory could not explain, much less predict, the near collapse of the financial system and its long-lasting effects on the global economy. Since the 2008 crisis, there has been increasing interest in using ideas from complexity theory to make sense of economic and financial markets. Concepts, such as tipping points, networks, contagion, feedback, and resilience have entered the financial and regulatory lexicon, but actual use of complexity models and results remains at an early stage. Recent insights and techniques offer potential for better monitoring and management of highly interconnected economic and financial systems and, thus, may help anticipate and manage future crises.

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Published In

Science
Volume 351 | Issue 6275
19 February 2016

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Published in print: 19 February 2016

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Acknowledgments

We acknowledge financial support from The Netherlands Institute of Advanced Studies in the Humanities and Social Sciences, The Netherlands Organisation for Scientific Research, the Lorentz Center, and the Tinbergen Institute.

Authors

Affiliations

Stefano Battiston*
Department of Banking and Finance, University of Zurich, 8032 Zürich, Switzerland.
J. Doyne Farmer
Institute for New Economic Thinking, Oxford Martin School, and Mathematical Institute, University of Oxford, Oxford OX1 2JD, UK.
Santa Fe Institute, Santa Fe, NM 87501, USA.
Andreas Flache
Department of Sociology, University of Groningen, 9712 TG Groningen, Netherlands.
Diego Garlaschelli
Lorentz Institute for Theoretical Physics, University of Leiden, 2333 CA Leiden, Netherlands.
Andrew G. Haldane
Bank of England, London, EC2R 8AH, UK.
Hans Heesterbeek
Faculty of Veterinary Medicine, University of Utrecht, 3512 JE Utrecht, Netherlands.
Cars Hommes [email protected]
Amsterdam School of Economics, University of Amsterdam, 1018 WB Amsterdam, Netherlands.
Tinbergen Institute, 1082 MS Amsterdam, Netherlands.
Carlo Jaeger
Beijing Normal University, 100875 Beijing, China.
Potsdam University, 14469 Potsdam, Germany.
Global Climate Forum 10178 Berlin, Germany.
Robert May
Department of Zoology, University of Oxford, Oxford OX1 2JD, UK.
Marten Scheffer
Environmental Sciences, Wageningen University 6708 PB Wageningen, Netherlands.

Notes

*
Authors are in alphabetical order.
Corresponding author. E-mail: [email protected]

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