posted on 2016-02-02, 15:07authored byElvis Oltean
In the present paper, we identify several distributions from Physics and study their
applicability to phenomena such as distribution of income, wealth, and expenditure. Firstly,
we apply logistic distribution to these data and we find that it fits very well the annual data
for the entire income interval including for upper income segment of population. Secondly,
we apply Fermi-Dirac distribution to these data. We seek to explain possible correlations and analogies between economic systems and statistical thermodynamics systems. We try to
explain their behaviour and properties when we correlate physical variables with
macroeconomic aggregates and indicators. Then we draw some analogies between parameters of the Fermi-Dirac distribution and macroeconomic variables. Thirdly, as complex systems are modelled using polynomial distributions, we apply polynomials to the annual sets of data and we find that it fits very well also the entire income interval. Fourthly,
we develop a new methodology to approach dynamically the income, wealth, and expenditure distribution similarly with dynamical complex systems. This methodology was applied to
different time intervals consisting of consecutive years up to 35 years. Finally, we develop a mathematical model based on a Hamiltonian that maximises utility function applied to Ramsey model using Fermi-Dirac and polynomial utility functions. We find some theoretical connections with time preference theory. We apply these distributions to a large pool of data from countries with different levels of development, using different methods for calculation of income, wealth, and expenditure.
This work is made available according to the conditions of the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International (CC BY-NC-ND 4.0) licence. Full details of this licence are available at: https://creativecommons.org/licenses/by-nc-nd/4.0/
Publication date
2016
Notes
A Doctoral Thesis. Submitted in partial fulfilment of the requirements for the award of Doctor of Philosophy of Loughborough University.