Title: The risk of contagion spreading and its optimal control in the economy,
Abstract: The global crisis of 2008 provoked a heightened interest among scientists to
study the phenomenon, its propagation and negative consequences. The process of
modelling the spread of a virus is commonly used in epidemiology. Conceptually,
the spread of a disease among a population is similar to the contagion process
in economy. This similarity allows considering the contagion in the world
financial system using the same mathematical model of infection spread that is
often used in epidemiology. Our research focuses on the dynamic behaviour of
contagion spreading in the global financial network. The effect of infection by
a systemic spread of risks in the network of national banking systems of
countries is tested. An optimal control problem is then formulated to simulate
a control that may avoid significant financial losses. The results show that
the proposed approach describes well the reality of the world economy, and
emphasizes the importance of international relations between countries on the
financial stability.