Wealth condensation in pareto macroeconomics

Z. Burda, D. Johnston, J. Jurkiewicz, M. Kamiński, M. A. Nowak, G. Papp, I. Zahed

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Abstract

We discuss a Pareto macroeconomy (a) in a closed system with fixed total wealth and (b) in an open system with average mean wealth, and compare our results to a similar analysis in a super-open system (c) with unbounded wealth [J.-P. Bouchaud and M. Mézard, Physica A 282, 536 (2000)]. Wealth condensation takes place in the social phase for closed and open economies, while it occurs in the liberal phase for super-open economics. In the first two cases, the condensation is related to a mechanism known from the balls-in-boxes model, while in the last case, to the nonintegrable tails of the Pareto distribution. For a closed macroeconomy in the social phase, we point to the emergence of a "corruption" phenomenon: a sizeable fraction of the total wealth is always amassed by a single individual. ©20Q2 The American Physical Society.

Original languageEnglish
Article number026102
Pages (from-to)026102/1-026102/4
JournalPhysical Review E
Volume65
Issue number2
DOIs
Publication statusPublished - Feb 2002

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    Burda, Z., Johnston, D., Jurkiewicz, J., Kamiński, M., Nowak, M. A., Papp, G., & Zahed, I. (2002). Wealth condensation in pareto macroeconomics. Physical Review E, 65(2), 026102/1-026102/4. [026102]. https://doi.org/10.1103/PhysRevE.65.026102