To the problem of turbulence in quantitative easing transmission channels and transactions network channels at quantitative easing policy implementation by central banks
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Abstract
In agreement with the recent research findings in the econophysics, we propose that
the nonlinear dynamic chaos can be generated by the turbulent capital flows in both
the quantitative easing transmission channels and the transaction networks channels,
when there are the laminar turbulent capital flows transitions in the financial system.
We demonstrate that the capital flows in both the quantitative easing transmission
channels and the transaction networks channels in the financial system can be accurately
characterized by the Reynolds numbers. We explain that the transition to the nonlinear
dynamic chaos regime can be realized through the cascade of the Landau, Hopf bifurcations
in the turbulent capital flows in both the quantitative easing transmission channels
and the transaction networks channels in the financial system. We completed the computer
modeling, using both the Nonlinear Dynamic Stochastic General Equilibrium Theory (NDSGET)
and the Hydrodynamics Theory (HT), to accurately characterize the US economy in the
conditions of the QE policy implementation by the US Federal Reserve. We found that
the ability of the US financial system to adjust to the different levels of liquidity
depends on the nonlinearities appearance in the QE transmission channels, and is limited
by the laminar turbulent capital flows transitions in the QE transmission channels
and the transaction networks channels in the US financial system. The proposed computer
model allows us to make the accurate forecasts of the US economy performance in the
cases, when there are the different levels of liquidity in the US financial system.