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Complex systems ranging from ecosystems to financial markets and the climate may have tipping points where a sudden shift to a contrasting regime can occur. As such critical transitions can have dire consequences, being able to predict them is very important. Unfortunately, detecting critical points is extremely difficult as good predictive models are mostly lacking. However, recent work suggests that we may find empirical indicators to assess whether a system is approaching a tipping point. Such generic early-warning indicators appear to work for all kinds of critical transitions and, in principle, can be identifiable in a wide range of complex systems like ecosystems, financial markets, or the climate. | Complex systems ranging from ecosystems to financial markets and the climate may have tipping points where a sudden shift to a contrasting regime can occur. As such critical transitions can have dire consequences, being able to predict them is very important. Unfortunately, detecting critical points is extremely difficult as good predictive models are mostly lacking. However, recent work suggests that we may find empirical indicators to assess whether a system is approaching a tipping point. Such generic early-warning indicators appear to work for all kinds of critical transitions and, in principle, can be identifiable in a wide range of complex systems like ecosystems, financial markets, or the climate. | ||
Economic models in current use do not pretend to be theories of everything economic; any such pretensions would immediately be thwarted by computational infeasibility and the paucity of theories for most types of economic behavior. Therefore conclusions drawn from models will be approximate representations of economic facts. However, properly constructed models can remove extraneous information and isolate useful approximations of key relationships. In this way more can be understood about the relationships in question than by trying to understand the entire economic process. | |||
Revision as of 10:10, 2 September 2011
Practical Methods for Analysis of Early - Warnings for Regime Shifts
October 10 - 12, 2011
Complex systems ranging from ecosystems to financial markets and the climate may have tipping points where a sudden shift to a contrasting regime can occur. As such critical transitions can have dire consequences, being able to predict them is very important. Unfortunately, detecting critical points is extremely difficult as good predictive models are mostly lacking. However, recent work suggests that we may find empirical indicators to assess whether a system is approaching a tipping point. Such generic early-warning indicators appear to work for all kinds of critical transitions and, in principle, can be identifiable in a wide range of complex systems like ecosystems, financial markets, or the climate.
Economic models in current use do not pretend to be theories of everything economic; any such pretensions would immediately be thwarted by computational infeasibility and the paucity of theories for most types of economic behavior. Therefore conclusions drawn from models will be approximate representations of economic facts. However, properly constructed models can remove extraneous information and isolate useful approximations of key relationships. In this way more can be understood about the relationships in question than by trying to understand the entire economic process.