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An agent based decentralized matching macroeconomic model

Author

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  • Luca Riccetti
  • Alberto Russo
  • Mauro Gallegati

Abstract

In this paper we present a macroeconomic microfounded framework with heterogeneous agents—individuals, firms, banks—which interact through a decentralized matching process presenting common features across four markets—goods, labor, credit and deposit. We study the dynamics of the model by means of computer simulation. Some macroeconomic properties emerge such as endogenous business cycles, nominal GDP growth, unemployment rate fluctuations, the Phillips curve, leverage cycles and credit constraints, bank defaults and financial instability, and the importance of government as an acyclical sector which stabilize the economy. The model highlights that even extended crises can endogenously emerge. In these cases, the system may remain trapped in a large unemployment status, without the possibility to quickly recover unless an exogenous intervention takes place. Copyright Springer-Verlag Berlin Heidelberg 2015

Suggested Citation

  • Luca Riccetti & Alberto Russo & Mauro Gallegati, 2015. "An agent based decentralized matching macroeconomic model," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 10(2), pages 305-332, October.
  • Handle: RePEc:spr:jeicoo:v:10:y:2015:i:2:p:305-332
    DOI: 10.1007/s11403-014-0130-8
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    More about this item

    Keywords

    Agent-based macroeconomics; Business cycle; Crisis ; Unemployment; Leverage; E32; C63;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques

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