Abstract
A fear of crashes preoccupies stock market observers, both investors and economic decision makers (governments, banks). This is reflected in major efforts to predict future stock values. However, an economic system under prolonged stress may have in its nature to plunge to lower performance levels but recover without suffering damage. To support this claim, we draw parallels between two complex systems: that of the heart, as observed through the rate of heartbeat, and the economy, measured by the stock index record. The ultimate stress situation of fetal heartbeat during labour provides a conceptual basis for accommodating heavy crashes. It also suggests a different perspective for evaluating crashes and post crash recovery in order to diagnose, and (ultimately) prognose, ‘economic health’, in addition to monitoring the stock index value.
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