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Flexibility of wages and macroeconomic instability in an agent-based computational model with endogenous money

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  • Pascal Seppecher

    ()
    (CEMAFI - Centre d'Etudes en Macroéconomie et Finance Internationale - Université Nice Sophia Antipolis (UNSA))

Abstract

We 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 Info

Paper provided by HAL in its series Post-Print with number hal-00661956.

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Date of creation: Jun 2010
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Publication status: Published - Presented, Workshop on Economic Heterogeneous Interacting Agents ESHIA/WEHIA 2010, 2010, Alessandria, Italy
Handle: RePEc:hal:journl:hal-00661956

Note: View the original document on HAL open archive server: http://hal-unice.archives-ouvertes.fr/hal-00661956
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Related research

Keywords: monetary economics; endogenous money; labor market dynamics; deflation; agent-based modeling;

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References

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  1. Pascal Seppecher, 2010. "Dysfonctionnement bancaire, bulle du crédit et instabilité macroéconomique dans une économie monétaire dynamique et complexe," Revue économique, Presses de Sciences-Po, Presses de Sciences-Po, vol. 0(3), pages 441-449.
  2. Pascal Seppecher, 2009. "Un modèle macroéconomique multi-agents avec monnaie endogène," Working Papers halshs-00370716, HAL.
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Citations

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Cited by:
  1. repec:spo:wpecon:info:hdl:2441/f6h8764enu2lskk9p6go0e900 is not listed on IDEAS
  2. Giovanni Dosi & Giorgio Fagiolo & Mauro Napoletano & Andrea Roventini & Tania Treibich, 2014. "Fiscal and Monetary Policies in Complex Evolving Economies," LEM Papers Series, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy 2014/07, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
  3. Lengnick, Matthias, 2013. "Agent-based macroeconomics: A baseline model," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 86(C), pages 102-120.
  4. John C. Boik, 2014. "First Microsimulation Model of a LEDDA Community Currency--Dollar Economy," Working Paper, Principled Societies Project 0001, Principled Societies Project, revised Aug 2014.
  5. Riccetti, Luca & Russo, Alberto & Mauro, Gallegati, 2013. "Financial Regulation in an Agent Based Macroeconomic Model," MPRA Paper 51013, University Library of Munich, Germany.
  6. Alessandro Caiani & Antoine Godin & Stefano Lucarelli, 2014. "Innovation and finance: a stock flow consistent analysis of great surges of development," Journal of Evolutionary Economics, Springer, Springer, vol. 24(2), pages 421-448, April.
  7. Bargigli, Leonardo & Gallegati, Mauro & Riccetti, Luca & Russo, Alberto, 2014. "Network analysis and calibration of the “leveraged network-based financial accelerator”," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 99(C), pages 109-125.
  8. 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.
  9. Antoine Godin, 2012. "Guaranteed Green Jobs: Sustainable Full Employment," Economics Working Paper Archive wp_722, Levy Economics Institute.
  10. Riccetti, Luca & Russo, Alberto & Gallegati, Mauro, 2012. "An Agent Based Decentralized Matching Macroeconomic Model," MPRA Paper 42211, University Library of Munich, Germany.
  11. 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.

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