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A basic macroeconomic agent-based model for analyzing monetary regime shifts

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  • Florian Peters
  • Doris Neuberger
  • Oliver Reinhardt
  • Adelinde Uhrmacher

Abstract

In macroeconomics, an emerging discussion of alternative monetary systems addresses the dimensions of systemic risk in advanced financial systems. Monetary regime changes with the aim of achieving a more sustainable financial system have already been discussed in several European parliaments and were the subject of a referendum in Switzerland. However, their effectiveness and efficacy concerning macro-financial stability are not well-known. This paper defines the economic requirements for modeling the current monetary system and introduces the corresponding macroeconomic agent-based model (MABM) in a continuous-time stochastic agent-based simulation environment with a provenance model. This MABM aims to present a starting point for exploring and analyzing monetary reforms. In this context, the monetary system affects the lending potential of banks and might impact the dynamics of financial crises. MABMs are predestined to replicate emergent financial crisis dynamics, analyze institutional changes within a financial system, and thus measure macro-financial stability. The used simulation environment makes the model more accessible and facilitates exploring the impact of different hypotheses and mechanisms in a less complex way. Moreover, the model replicates a wide range of stylized economic facts, which validates it as an analysis tool to implement and compare monetary regime shifts.

Suggested Citation

  • Florian Peters & Doris Neuberger & Oliver Reinhardt & Adelinde Uhrmacher, 2022. "A basic macroeconomic agent-based model for analyzing monetary regime shifts," PLOS ONE, Public Library of Science, vol. 17(12), pages 1-39, December.
    • Handle: RePEc:plo:pone00:0277615
    DOI: 10.1371/journal.pone.0277615
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    References listed on IDEAS

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    1. Luc Laeven & Fabian Valencia, 2020. "Systemic Banking Crises Database II," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 68(2), pages 307-361, June.
    2. Pablo Paniagua, 2016. "The robust political economy of central banking and free banking," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 29(1), pages 15-32, March.
    3. Pablo Paniagua, 2016. "The robust political economy of central banking and free banking," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 29(1), pages 15-32, March.
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