Systemic resilience in economics
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Abstract
We describe a framework for understanding the factors that underpin economic resilience, and identify the basic tools for implementing it. This principally involves examining resilience by design, which promotes endogenous reorganization in the economy, and by intervention, which includes exogenous measures such as bailouts, stockpiles and building buffers. We link these ideas to comparable notions from physics, such as the rich and non-trivial phenomenology that arises in circumstances when a system is dynamic and out of equilibrium. We contend that a more nuanced understanding of the underlying structure of our economic system could lead to more enlightened policy decisions that promote resilience and result in better outcomes in the long run. Drawing on notions from non-equilibrium physics, an interdisciplinary team of economists and scientists describe a framework for understanding the factors that underpin economic resilience, and identify the basic tools for implementing it.