IDEAS home Printed from
MyIDEAS: Login to save this book chapter or follow this series

Agent-Based Macro

In: Handbook of Computational Economics

  • Leijonhufvud, Axel
Registered author(s):

    Acceptance of computer modeling and experimentation has spread slowly at best in economics in large part because agent-based models often seem foreign to the neoclassical core of economics, as that core is understood today. But in its beginnings neoclassical economics was not built from choice theory, did not represent decisions as solutions to constrained optimization problems, made no strong assumptions about the rationality of agents, and did not view the world as always in equilibrium. Agent-based economics can tap into this older neoclassical economics of adaptive behavior and ongoing market processes while circumventing the technical obstacles which forced the forerunners to adopt the "static" method.Agent-based process analysis will finally make it possible to tackle the central problem of macroeconomics, namely, the self-regulating capabilities of a capitalistic economy. Keynes challenged the presumption that flexibility of all prices guaranteed the stability of general equilibrium, arguing that effective demand failures meant that Say's Law did not hold. When supply did not create its own demand, stabilization policy in the form of aggregate demand management was required to restore full employment. In modern general equilibrium based macroeconomics, in contrast, Say's Law always holds, only "frictions" stand in the way of full employment, and stabilization policy lacks any tenable rationalization.Agent-based computational methods provide the only way in which the self-regulatory capabilities of complex dynamic models can be explored so as to advance our understanding of the adaptive dynamics of actual economies.

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL:
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

    in new window

    This chapter was published in:
  • Leigh Tesfatsion & Kenneth L. Judd (ed.), 2006. "Handbook of Computational Economics," Handbook of Computational Economics, Elsevier, edition 1, volume 2, number 2, 00.
  • This item is provided by Elsevier in its series Handbook of Computational Economics with number 2-36.
    Handle: RePEc:eee:hecchp:2-36
    Contact details of provider: Web page:

    No references listed on IDEAS
    You can help add them by filling out this form.

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:eee:hecchp:2-36. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.