Economic Relativity: A Structural Law of Output Under Frictional Constraints

Custom ERM-based macro analysis and discussion are available upon request. The fee is USD 200 per session, which includes one follow-up Q&A. Contact: ljw800119@hotmail.com or contact@suf-institute.org

This paper establishes the foundational structure of the Economic Relativity Model (ERM), a parsimonious structural framework for modeling economic output under systemic friction and incentive constraints. The ERM formalizes output as a nonlinear function of potential production capacity, irreducible costs, price pressure, and institutional inefficiency, yielding a general law of constrained production applicable across micro, meso, and macro economic scales.

By introducing the cost–profit ratio as a dimensionless boundary variable, the model captures endogenous transitions between growth, stagnation, and contraction regimes without reliance on equilibrium assumptions or exogenous shock primitives. The framework provides a unified formalism linking behavioral expectations, structural efficiency, and output dynamics, offering a transparent alternative to parameter-heavy macroeconomic models.

Empirical validation and predictive performance of the ERM are documented in a companion study using long-horizon and cross-country data, available at:
https://zenodo.org/records/18124535

A policy-oriented structural forecasting application of the ERM, illustrating how incentive boundaries translate into divergent national trajectories and strategic inflection points, is provided as an extended case study:
https://zenodo.org/records/16825636

A concise micro-level illustrative example of the ERM, designed to clarify the operational logic of the model at the firm level, is provided in a companion paper:
https://zenodo.org/records/16741181

An extended theoretical exposition of the ERM, including detailed derivations and broader applications, is available in book form via Kindle:
https://www.amazon.com/dp/B0FVRCGRCF

A cross-domain structural generalization of the incentive boundary logic underlying the ERM, extending the framework from economic systems to collective behavioral systems more broadly, is developed in:

Behavioral Boundary Relativity: Structural Conditions for Stability and Breakdown in Collective Systems
https://zenodo.org/records/18139321

Official project updates and public discussions related to the Economic Relativity Model (ERM) are available at:
https://www.facebook.com/EconomicRelativityResearch/