An Agent-Based Decentralized Matching Macroeconomic Model

24 Pages Posted: 20 Oct 2012  

Luca Riccetti

Università degli Studi di Macerata

Alberto Russo

Università Politecnica delle Marche, Ancona - Department of Management

Mauro Gallegati

Università Politecnica delle Marche - Faculty of Economics

Date Written: October 18, 2012

Abstract

In this paper we present a macroeconomic microfounded framework with heterogeneous agents -- households, firms, banks -- which interact through a decentralized matching process presenting common features across four markets -- goods, labor, credit and deposit. We study the dynamics of the model by means of computer simulation. Some macroeconomic properties emerge such as endogenous business cycles, nominal GDP growth, unemployment rate fluctuations, the Phillips curve, leverage cycles and credit constraints, bank defaults and financial instability, and the importance of government as an acyclical sector which stabilize the economy. The model highlights that even extended crises can endogenously emerge. In these cases, the system may remain trapped in a large unemployment status, without the possibility to quickly recover unless an exogenous intervention.

Keywords: agent-based macroeconomics, business cycle, crisis, unemployment, leverage

JEL Classification: E32, C63

Suggested Citation

Riccetti, Luca and Russo, Alberto and Gallegati, Mauro, An Agent-Based Decentralized Matching Macroeconomic Model (October 18, 2012). Available at SSRN: https://ssrn.com/abstract=2163581 or http://dx.doi.org/10.2139/ssrn.2163581

Luca Riccetti (Contact Author)

Università degli Studi di Macerata ( email )

via Crescimbeni
Macerata
Italy

HOME PAGE: http://docenti.unimc.it/luca.riccetti

Alberto Russo

Università Politecnica delle Marche, Ancona - Department of Management ( email )

Piazzale Martelli, 8
60121 Ancona
Italy

Mauro Gallegati

Università Politecnica delle Marche - Faculty of Economics ( email )

Piazzale Martelli, 8
60121 Ancona
Italy
++390712207188 (Phone)
++390712207102 (Fax)

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