The sustainability transition and the digital transformation: two challenges for agent-based macroeconomic models

Digital transformation and sustainability transition are complex phenomena characterized by fundamental uncertainty. The potential consequences deriving from these processes are the subject of open debates among economists and policy-makers. In this respect, adopting a modeling and simulation approach represents one of the best solutions in order to study potential effects linked to these complex phenomena. Agent-based modeling represents an appropriate paradigm to address complexity. This research aims at showing the potential of the large-scale macroeconomic agent-based model Eurace in order to investigate challenges like sustainability transition and digital transformation. In particular, two different simulation studies, i.e., the digital transformation and the sustainability transition are presented, in order to show the potential of the Eurace model in addressing such kinds of complex phenomena. As regards the digital transformation, the Eurace model is able to capture interesting business dynamics characterizing the so-called increasing returns world and, in case of high rates of digital technological progress, it shows significant technological unemployment. As regards the sustainability transition, it displays a rebound effect on energy savings that compromises efforts to reduce greenhouse gas emissions via electricity efficiency improvements. Furthermore, it shows that a carbon tax could be not sufficient to decouple the economy from carbon consumption and that a feed-in tariff policy fostering renewable energy production growth may be more effective.