The Labour-Augmented K S Model: A Laboratory for the Analysis of Institutional and Policy Regimes

35 Pages Posted: 25 Aug 2018

See all articles by Giovanni Dosi

Giovanni Dosi

Scuola Superiore Sant'Anna di Pisa - Laboratory of Economics and Management (LEM)

Marcelo C. Pereira

University of Campinas

Andrea Roventini

Scuola Superiore Sant'Anna di Pisa - Laboratory of Economics and Management (LEM); Observatoire Fran├žais des Conjonctures Economiques (OFCE)

Maria Enrica Virgillito

Scuola Superiore Sant'Anna di Pisa

Date Written: August 8, 2018

Abstract

In this work we discuss the research findings from the labour-augmented Schumpeter meeting Keynes (K S) agent-based model. It comprises comparative dynamics experiments on an artificial economy populated by heterogeneous, interacting agents, as workers, firms, banks and the government. The exercises are characterized by different degrees of labour flexibility, or by institutional shocks entailing labour market structural reforms, wherein the phenomenon of hysteresis is endogenous and pervasive. The K S model constitutes a laboratory to evaluate the effects of new institutional arrangements as active/passive labour market policies, and fiscal austerity. In this perspective, the model allows mimicking many of the customary policy responses which the European Union and many Latin American countries have embraced in reaction to the recent economic crises. The obtained results seem to indicate, however, that most of the proposed policies are likely inadequate to tackle the short-term crises consequences, and even risk demoting the long-run economic prospects. More objectively, the conclusions offer a possible explanation to the negative path traversed by economies like Brazil, where many of the mentioned policies were applied in a short period, and hint about some risks ahead.

Keywords: Labour Market, Policy Evaluation, Agent-Based Model

JEL Classification: C63, E24, H53, J88

Suggested Citation

Dosi, Giovanni and Pereira, Marcelo and Roventini, Andrea and Virgillito, Maria Enrica, The Labour-Augmented K S Model: A Laboratory for the Analysis of Institutional and Policy Regimes (August 8, 2018). Available at SSRN: https://ssrn.com/abstract=3232487 or http://dx.doi.org/10.2139/ssrn.3232487

Giovanni Dosi (Contact Author)

Scuola Superiore Sant'Anna di Pisa - Laboratory of Economics and Management (LEM) ( email )

Piazza Martiri della Liberta, 33
Pisa, I-56127
Italy

HOME PAGE: www.lem.sssup.it

Marcelo Pereira

University of Campinas ( email )

Rua Pitagoras 353
Campinas, Campinas 13088-857
Brazil

Andrea Roventini

Scuola Superiore Sant'Anna di Pisa - Laboratory of Economics and Management (LEM) ( email )

Piazza Martiri della Liberta', 33-I-56127
Pisa
Italy

Observatoire Fran├žais des Conjonctures Economiques (OFCE)

69 Quai d'Orsay
Paris 75004
France

Maria Enrica Virgillito

Scuola Superiore Sant'Anna di Pisa ( email )

Biblioteca Scuola Superiore Sant'Anna
Piazza Martiri della Liberta, n. 33
Pisa, 56127
Italy

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