An Econophysical Dynamic Approach of Expenditure and Income Distribution in the UK
American Journal of Physics and Applications
Volume 2, Issue 3, May 2014, Pages: 73-77
Received: Apr. 20, 2014; Accepted: May 6, 2014; Published: May 20, 2014
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Authors
Elvis Oltean, Department of Physics, Loughborough University, Loughborough, the UK
Fedor V. Kusmartsev, Department of Physics, Loughborough University, Loughborough, the UK
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Abstract
We extend the exploration regarding dynamic approach of macroeconomic variables by tackling systematically expenditure using Statistical Physics models (for the first time to the best of our knowledge). Also, using polynomial distribution which characterizes the behavior of dynamic systems in certain situations, we extend also our analysis to mean income data from the UK that span for a time interval of 35 years. We find that most of the values for coefficient of determination obtained from fitting the data from consecutive years analysis to be above 80%. We used for our analysis first degree polynomial, but higher degree polynomials and longer time intervals between the years considered can dramatically increase goodness of the fit. As this methodology was applied successfully to income and wealth, we can conclude that macroeconomic systems can be treated similarly to dynamic systems from Physics. Subsequently, the analysis could be extended to other macroeconomic indicators.
Keywords
Dynamic Systems, Polynomial Distribution, Lower Limit on Expenditure, Gross Expenditure, Disposable Expenditure
To cite this article
Elvis Oltean, Fedor V. Kusmartsev, An Econophysical Dynamic Approach of Expenditure and Income Distribution in the UK, American Journal of Physics and Applications. Vol. 2, No. 3, 2014, pp. 73-77. doi: 10.11648/j.ajpa.20140203.11
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