Copyright (c) B.Achutha 1992 - 2000 Malaysia

States of Equilbrium

The graph below shows a historical deflationary trend for KLSE Composite Index. In addition I am introducing the concept of States of Equilibrium. The shifting of states of equilibrium is another common behaviour in markets and I initially observed them when I was examining commodity price movements.

I have tried, by visual inspection to indentify the states, as I have not done the mathematical analysis at the time of writing.

Can a Crash be described as a drop by more than one state and a Slow down being a drop to an adjacent state?

I do hope the reader could appreaciate why Malaysai's Capital Controls and Exchange Controls were necessary. They were needed to prevent the economy staying in State 1 for too long. A mathematically derived boundary levels of the individual states will be provided later.