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Macroeconomics in a Self-Organizing Economy

Author

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  • Quamrul Ashraf
  • Boris Gershman
  • Peter Howitt

Abstract

This 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.

Suggested Citation

  • Quamrul Ashraf & Boris Gershman & Peter Howitt, 2012. "Macroeconomics in a Self-Organizing Economy," Revue de l'OFCE, Presses de Sciences-Po, vol. 0(5), pages 43-65.
    • Handle: RePEc:cai:reofsp:reof_124_0043
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    Citations

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    Cited by:

    1. Jean-Luc Gaffard & Mauro Napoletano, 2012. "Improving the toolbox. New advances in Agent-based and Computational Models," Revue de l'OFCE, Presses de Sciences-Po, vol. 0(5), pages 7-13.
    2. Jean-Luc Gaffard & Mauro Napoletano, 2018. "Hétérogénéité des agents, interconnexions financières et politique monétaire : une approche non conventionnelle," Revue française d'économie, Presses de Sciences-Po, vol. 0(3), pages 201-231.
    3. Orlando Gomes, 2017. "Heterogeneous wage setting and endogenous macro volatility," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 12(1), pages 27-57, April.
    4. Jean-Luc Gaffard & Mauro Napoletano, 2012. "Introduction - Improving the Toolbox: New Advances in Agent-Based and Computational Models," Post-Print hal-01053562, HAL.
    5. repec:hal:spmain:info:hdl:2441/53r60a8s3kup1vc9l564k4686 is not listed on IDEAS
    6. repec:hal:spmain:info:hdl:2441/1gb0ntthu59j4pgf4ju708hsdv is not listed on IDEAS

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