Increasing Inequality and Financial Fragility in an Agent Based Macroeconomic Model

Russo, Alberto; Riccetti, Luca; Gallegati, Mauro

doi:10.2139/ssrn.2356249

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Increasing Inequality and Financial Fragility in an Agent Based Macroeconomic Model

18 Pages Posted: 19 Nov 2013

See all articles by Alberto Russo

Alberto Russo

Università Politecnica delle Marche, Ancona - Department of Management

Mauro Gallegati

Polytechnic University of Marche - Faculty of Economics

Date Written: November 18, 2013

Abstract

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

Suggested Citation: Suggested Citation

Russo, Alberto and Riccetti, Luca and Gallegati, Mauro, Increasing Inequality and Financial Fragility in an Agent Based Macroeconomic Model (November 18, 2013). Available at SSRN: https://ssrn.com/abstract=2356249 or http://dx.doi.org/10.2139/ssrn.2356249