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 InfoPaper provided by HAL in its series Post-Print with number hal-00661956.
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
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monetary economics; endogenous money; labor market dynamics; deflation; agent-based modeling;
Other versions of this item:
- Seppecher, Pascal, 2012. "Flexibility Of Wages And Macroeconomic Instability In An Agent-Based Computational Model With Endogenous Money," Macroeconomic Dynamics, Cambridge University Press, vol. 16(S2), pages 284-297, September.
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- 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.
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- 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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