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Lattice theory in economics

2019-04-15 News No comment

Let us continue our discussion [see "The recession is over or not? – Fractal"] and further strengthen our world economic model. The best tool we can use is Lattice theory.

I will try to explain it without using any complicated mathematical solutions [this is not an easy task].

A simple grid consists of interconnected "nodes" that you will see in scientific books when you talk about crystal structures. The simplest or one-dimensional lattice is a line with the following nodes:

-o-O-O-O-O-

As you can see, each node is connected to two adjacent nodes. If we add another dimension, then each node will have 4 connections. Three-dimensional will be similar to "crystal structure" with 8 connections. If we exceed 3D lattice, then you need to use your mathematical imagination, but the number of connections will increase by 2, such as 16, 32, 64, etc.

If each node has the same number of connections, the lattice is called a regular lattice, but if some connections are broken – the lattice becomes irregular. In this case, the node with the largest number of connections is called a super node.

Now, when we know what the lattice is, we apply this structure to economics. Each node is an “economic unit” from an individual to a multinational company or government. Each node has a certain number of "economic links" [we should only choose the necessary, otherwise we will use too many dimensions], for example, individuals and his employers [salary], banks [services] and government [tax] related. The company will connect to customers, suppliers, banks and governments.

Even from the above you can see that banks and governments always exist, so they are our super nodes.

We have described the grid as much as possible, but without using any math, which is not bad for mathematical models.

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