The therapy to shock therapy: optimal dynamical policies for transition economies

Challet, Damien; Solomon, Sorin; Yaari, Gur

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The therapy to shock therapy: optimal dynamical policies for transition economies

Challet, Damien Institute for Scientifc Interchange (ISI), Torino, Italy - Physics department, University of Fribourg, Switzerland
Solomon, Sorin The Racah Institute of Physics, Hebrew University, Jerusalem, Israel - Institute for Scientifc Interchange (ISI), Torino, Italy
Yaari, Gur The Racah Institute of Physics, Hebrew University, Jerusalem, Israel - Institute for Scientifc Interchange (ISI), Torino, Italy

2008

English We show that a simple model reproduces very closely the evolution of the GDP in constant dollars of many countries during the times of recession and recovery. A theoretical analysis illustrates how an optimal dynamical policy reduces both recession duration and severity, and increases the value of GDP at all times. We propose a criterion to distinguish a posteriori a dynamical policy from a static one.

Faculty

Faculté des sciences et de médecine

Department

Département de Physique

Language