Macroeconomics in a Self-Organizing Economy
AbstractThis paper emphasizes the importance of considering the mechanisms that coordinate economic transactions in a decentralized economy, namely the role played by a self-organizing network of entrepreneurial trading firms, for theories aimed at guiding macroeconomic policy. We review a research program that aims to understand how, and how well, trading activities are coordinated in various circumstances by employing agent-based computational (ACE) models of stylized economies where these activities take place in a self-organizing network of markets created and operated by profit-seeking business firms. We discuss how such a research program can yield important policy-relevant insights, beyond those that can be offered by conventional dynamic stochastic general equilibrium (DSGE) models, into several macroeconomic phenomena including the emergence of monetary equilibria in a decentralized economy, the microfoundations of the multiplier process, the costs of a higher trend rate of inflation, and the role of the banking system in economic crises.
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Bibliographic InfoArticle provided by Presses de Sciences-Po in its journal Revue de l'OFCE.
Volume (Year): N° 124 (2012)
Issue (Month): 5 ()
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Web page: http://www.cairn.info/revue-de-l-ofce.htm
self-organizing trade networks; market coordination; agent-based computational economics; emergence of monetary equilibria; the multiplier process; costs of inflation; bank regulation; economic crises;
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