Agent-based macroeconomics - a baseline model
AbstractThis paper develops a baseline agent-based macroeconomic model and contrasts it with the common dynamic stochastic general equilibrium approach. Although simple, the model can reproduce a lot of the stylized facts of business cycles. The author argues that agent-based modeling is an adequate response to the recently expressed criticism of macroeconomic methodology. It does not depend on the strict assumption of rationality and allows for aggregate behavior that is more than simply a replication of microeconomic optimization decisions. At the same time it allows for absolutely consistent micro foundations. Most importantly, it does not depend on equilibrium assumptions or fictitious auctioneers and does therefore not rule out coordination failures, instability and crisis by definition. --
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Bibliographic InfoPaper provided by Christian-Albrechts-University of Kiel, Department of Economics in its series Economics Working Papers with number 2011,04.
Date of creation: 2011
Date of revision:
agent-based modeling; complex adaptive systems; microfoundations of macroeconomics;
Other versions of this item:
- B4 - Schools of Economic Thought and Methodology - - Economic Methodology
- E1 - Macroeconomics and Monetary Economics - - General Aggregative Models
- E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-04-30 (All new papers)
- NEP-CBA-2011-04-30 (Central Banking)
- NEP-CBE-2011-04-30 (Cognitive & Behavioural Economics)
- NEP-CMP-2011-04-30 (Computational Economics)
- NEP-DGE-2011-04-30 (Dynamic General Equilibrium)
- NEP-MAC-2011-04-30 (Macroeconomics)
- NEP-ORE-2011-04-30 (Operations Research)
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