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Monetary Policy Experiments in an Artificial Multi-Market Economy with Reservation Wages

In: Artificial Markets Modeling

Author

Listed:
  • Marco Raberto

    (University of Genova)

  • Andrea Teglio

    (University of Genova)

  • Silvano Cincotti

    (University of Genova)

Abstract

The agent-based framework provides an useful computational facility for economics, where performing experiments on policy design issues in a realistic environment, characterized by non-clearing markets and bounded rational agents (see Tesfatsion and Judd, 2006, for a recent survey). Under this respect, this study addresses the issue of monetary policy design by investigating an appropriate rule for the central bank interest rate. Our work consists in pursuing a general equilibrium approach to the problem by considering a multi-market economy characterized by a goods, a labor and a credit market, where agents are price makers on the supply side and act according to sensible rules of thumb. A previous paper (Raberto et al., 2006) by the authors showed the absence of real effects of monetary policy in an agent-based model characterized by price-taking agents. However, if agents are price makers, prices may be set far away from their market clearing values, thereby allowing potential real effects of monetary policy.

Suggested Citation

  • Marco Raberto & Andrea Teglio & Silvano Cincotti, 2007. "Monetary Policy Experiments in an Artificial Multi-Market Economy with Reservation Wages," Lecture Notes in Economics and Mathematical Systems, in: Andrea Consiglio (ed.), Artificial Markets Modeling, chapter 3, pages 33-44, Springer.
    • Handle: RePEc:spr:lnechp:978-3-540-73135-1_3
    DOI: 10.1007/978-3-540-73135-1_3
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    Cited by:

    1. Marco Raberto & Andrea Teglio & Silvano Cincotti, 2008. "Integrating Real and Financial Markets in an Agent-Based Economic Model: An Application to Monetary Policy Design," Computational Economics, Springer;Society for Computational Economics, vol. 32(1), pages 147-162, September.

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