Increasing Inequality and Financial Fragility in an Agent Based Macroeconomic Model
18 Pages Posted: 19 Nov 2013
Date Written: November 18, 2013
The aim of this paper is to investigate the relationship between increasing inequality and financial fragility in an agent based macroeconomic model. We analyse the effects of a non-linear relationship between wealth and consumption on the evolution of the economic system. Preliminary results show that more inequality rises macroeconomic volatility, increasing the likelihood of observing large unemployment crises.
Keywords: agent-based model, business cycle, inequality, crisis
JEL Classification: C63, D31, E21, E32
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