GEOMETRY OF ECONOMICS: VOLUMETRIC DISTRIBUTION ANALYSIS OF ECONOMIC CONTINUITY AND STABILITY

Abstract

While economics derives its value from daily activity of its participants, logically making it a derivative (speed), a traditional approximation of economic variables is carried out using a set of linear and / or nonlinear regression equations and correlation analysis, with no differentiation involved. This explains why the traditionalanalysis is not capable of identification and prevention of a looming economic crisis: firstly, linear and nonlinearregression value approximation method always relies on continuity assumption of a variable, and secondly, focusing on speed of economics doesn’t solve a known limitation of a derivative - its continuity cannot be predicted. This limitation is proposed to be solved with volumetric distribution analysis using volumetric 3D geometry, allowing tracing how distribution of the entire population of the examined variables changes intime and volume as volumetric geometric figures, and what effect it has on continuity of its gradient -the “barometer” of an economic system. Our hypothesis is that a system is stable when it takes a nondegenerate geometric shape and unstable otherwise. An economy can take one shape or another, as volumetric distribution analysis shows, and visualizing it with geometric shapes and respective gradient can help predict its continuity.