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Economic Analysis: Theory and Practice
 

Synthesis of stable coalitions in the economy based on fundamental criteria of the portfolio theory

Vol. 20, Iss. 9, SEPTEMBER 2021

Received: 19 July 2021

Received in revised form: 30 July 2021

Accepted: 12 August 2021

Available online: 30 September 2021

Subject Heading: INVESTMENT ANALYSIS

JEL Classification: F02, F15, F36

Pages: 1678–1702

https://doi.org/10.24891/ea.20.9.1678

Oleg L. PODLINYAEV Irkutsk State University (ISU), Irkutsk, Russian Federation
podlinyaev@inbox.ru

https://orcid.org/0000-0002-6633-3997

David A. GERTSEKOVICH Irkutsk State University (ISU), Irkutsk, Russian Federation
davidgerc@yahoo.com

https://orcid.org/0000-0003-2544-8656

Sergei N. LARIN Central Economics and Mathematics Institute, RAS (CEMI RAS), Moscow, Russian Federation
sergey77707@rambler.ru

https://orcid.org/0000-0001-5296-5865

Subject. The article outlines basic principles of a mathematical model for formation of stable coalitions in the economy at the interstate level.
Objectives. We focus on developing a mathematical model to build such coalitions.
Methods. The study employs the portfolio theory, risk-return model, correlation and regression analysis, technical and fundamental analysis. The proposed model rests on fundamental provisions of creating a multicomponent, widely diversified investment portfolio. The model uses the key concepts, like expected profitability, risk level, industry diversification and hedging, in combination with the synthesis of a diversified group of leading commodity indices.
Results. We show possibilities of using internal (based on the country’s indices) and external (based on other countries’ indices) correlation analysis, according to data on trends in economic indices, to ensure sectoral diversification within the country and maximize the international level of sectoral diversification, respectively. We performed a fundamental analysis of the condition of economies of the countries included in the coalition, and of the countries, which are considered to be included in the coalition as appropriate. The paper assesses positive and negative factors of joint functioning of the economies of the coalition countries, from the point of view of their geographic location.
Conclusions. The model makes it possible to build new optimal coalitions in the economy, to analyze the practicability of further existence of previously formed coalitions, and to update the composition of coalitions, according to trends in the world economy development.

Keywords: coalition, economic sustainability, portfolio theory, risk-return model, sectoral and commodity indices

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