Subject of the present study is the agent-based computer simulation of Agent Island. Agent Island is a macroeconomic model, which belongs to the field of monetary theory. Agent-based modeling is an innovative tool that made much progress in other scientific fields like medicine or logistics. In economics this tool is quite new, and in monetary theory to this date virtual no agent-based simulation model has been developed. It is therefore the topic of this study to close this gap to some extend. Hence, the model integrates in a straightforward way next to the common private sectors (i.e. households, consumer goods firms and capital goods firms)and as an innovation a banking system, a central bank and a monetary circuit. Thereby, the central bank controls the business cycle via an interest rate policy; the according mechanism builds on the seminal idea of Knut Wicksell (natural rate of interest vs. money rate of interest). In addition, the model contains also many Keynesian features and a flow-of-funds accounting system in the tradition of Wolfgang Stützel. Importantly, one objective of the study is the validation of Agent Island, which means that the individual agents (i.e. their rules, variables and parameters) are adjusted in such a way that on the aggregate level certain phenomena emerge. The crucial aspect of the modeling and the validation is therefore the relation between the micro and macro level: Every phenomenon on the aggregate level (e.g. some stylized facts of the business cycle, the monetary transmission mechanism, the Phillips curve relationship, the Keynesian paradox of thrift or the course of the business cycle) emerges out of individual actions and interactions of the many thousand agents on Agent Island. In contrast to models comprising a representative agent, we do not apply a modeling on the aggregate level; and in contrast to orthodox GE models, true interaction between heterogeneous agents takes place (e.g. by face-to-face-trading).
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number
18199.
Find related papers by JEL classification: E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian C63 - Mathematical and Quantitative Methods - - Mathematical Methods and Programming - - - Computational Techniques E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General E1 - Macroeconomics and Monetary Economics - - General Aggregative Models E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates E20 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
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