Flexibility Of Wages And Macroeconomic Instability In An Agent-Based Computational Model With Endogenous Money
AbstractWe present a model of a dynamic and complex economy in which the creation and the destruction of money result from interactions between multiple and heterogeneous agents. In the baseline scenario, we observe the stabilization of the income distribution between wages and profits. We then alter the model by increasing the flexibility of wages. This change leads to the formation of a deflationary spiral. Aggregate activity decreases and the unemployment increases. The macroeconomic stability of the model is affected and eventually a systemic crisis arises. Finally, we show that the introduction of a minimum wage would have allowed the aggregate demand to be boosted and to avoid this crisis.
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Bibliographic InfoArticle provided by Cambridge University Press in its journal Macroeconomic Dynamics.
Volume (Year): 16 (2012)
Issue (Month): S2 (September)
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Other versions of this item:
- Pascal Seppecher, 2010. "Flexibility of wages and macroeconomic instability in an agent-based computational model with endogenous money," Post-Print hal-00661956, HAL.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Pascal Seppecher, 2009. "Un modèle macroéconomique multi-agents avec monnaie endogène," Working Papers halshs-00370716, HAL.
- Pascal Seppecher, 2010. "Dysfonctionnement bancaire, bulle du crédit et instabilité macroéconomique dans une économie monétaire dynamique et complexe," Revue économique, Presses de Sciences-Po, vol. 0(3), pages 441-449.
- Antoine Godin, 2012. "Guaranteed Green Jobs: Sustainable Full Employment," Economics Working Paper Archive wp_722, Levy Economics Institute, The.
- Riccetti, Luca & Russo, Alberto & Mauro, Gallegati, 2013. "Financial Regulation in an Agent Based Macroeconomic Model," MPRA Paper 51013, University Library of Munich, Germany.
- Riccetti, Luca & Russo, Alberto & Gallegati, Mauro, 2012. "An Agent Based Decentralized Matching Macroeconomic Model," MPRA Paper 42211, University Library of Munich, Germany.
- Riccetti, Luca & Russo, Alberto & Gallegati, Mauro, 2013. "Unemployment benefits and financial factors in an agent-based macroeconomic model," Economics Discussion Papers 2013-9, Kiel Institute for the World Economy.
- Alessandro Caiani & Antoine Godin & Stefano Lucarelli, 2012. "Innovation and Finance: An SFC Analysis of Great Surges of Development," Economics Working Paper Archive wp_733, Levy Economics Institute, The.
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