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Deleveraging crises and deep recessions: a behavioural approach


  • Pascal Seppecher

    () (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis - UCA - Université Côte d'Azur - CNRS - Centre National de la Recherche Scientifique, CEPN - Centre d'Economie de l'Université Paris Nord - UP13 - Université Paris 13 - USPC - Université Sorbonne Paris Cité - CNRS - Centre National de la Recherche Scientifique)

  • Isabelle Salle

    (CeNDEF - Center for Nonlinear Dynamics in Economics and Finance - UvA - Universiteit van Amsterdam, GREThA - Groupe de Recherche en Economie Théorique et Appliquée - UB - Université de Bordeaux - CNRS - Centre National de la Recherche Scientifique)


Macroeconomic dynamics are characterized by alternating patterns of periods of relative stability and large swings. Standard micro-founded macro-economic models account for these patterns through exogenous and persistent shocks. In this paper, we develop a fully decentralized and micro-founded macro-economic agent-based model, augmented with an opinion model, which produces endogenous waves of pessimism and optimism that feed back into firms' leverage and households' precautionary saving behaviour. A major emergent property of our model is precisely the complex successions of stable and unstable macro-economic regimes. The model is further able to account for a wide spectrum of macro-and micro empirical regularities. Within this framework, we analyse a series of macro-economic phenomena of key relevance in the current macro-economic debate, especially the occurrence of deleveraging crises and Fisherian debt-deflation recessions. Our analysis suggests that the relative dynamics of prices and wages and the resulting income distribution along a deflation-ary path are critical determinants of the severity of the recession, and the chances of recovery.

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  • Pascal Seppecher & Isabelle Salle, 2014. "Deleveraging crises and deep recessions: a behavioural approach," Post-Print hal-01110642, HAL.
  • Handle: RePEc:hal:journl:hal-01110642
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    References listed on IDEAS

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    Cited by:

    1. Bassi, Federico & Lang, Dany, 2016. "Investment hysteresis and potential output: A post-Keynesian–Kaleckian agent-based approach," Economic Modelling, Elsevier, vol. 52(PA), pages 35-49.
    2. Popoyan, Lilit & Napoletano, Mauro & Roventini, Andrea, 2017. "Taming macroeconomic instability: Monetary and macro-prudential policy interactions in an agent-based model," Journal of Economic Behavior & Organization, Elsevier, vol. 134(C), pages 117-140.
    3. Mauro Napoletano & Andrea Roventini & Jean-Luc Gaffard, 2015. "Time varying fiscal multipliers in an agent-based model with credit rationing," Sciences Po publications 2015-25, Sciences Po.
    4. Giorgio Fagiolo & Andrea Roventini, 2017. "Macroeconomic Policy in DSGE and Agent-Based Models Redux: New Developments and Challenges Ahead," Journal of Artificial Societies and Social Simulation, Journal of Artificial Societies and Social Simulation, vol. 20(1), pages 1-1.
    5. Joeri Schasfoort & Antoine Godin & Dirk Bezemer & Alessandro Caiani & Stephen Kinsella, 2017. "Monetary Policy Transmission In A Macroeconomic Agent-Based Model," Advances in Complex Systems (ACS), World Scientific Publishing Co. Pte. Ltd., vol. 20(08), pages 1-35, December.
    6. Michalis Nikiforos & Gennaro Zezza, 2017. "Stock-flow Consistent Macroeconomic Models: A Survey," Economics Working Paper Archive wp_891, Levy Economics Institute.
    7. Isabelle Salle & Pascal Seppecher, 2017. "Stabilizing an Unstable Complex Economy," CEPN Working Papers hal-01527740, HAL.
    8. Guerini, Mattia & Napoletano, Mauro & Roventini, Andrea, 2018. "No man is an Island: The impact of heterogeneity and local interactions on macroeconomic dynamics," Economic Modelling, Elsevier, vol. 68(C), pages 82-95.
    9. Pascal Seppecher & Isabelle Salle & Dany Lang, 2016. "Is the Market Really a Good Teacher? Market Selection, Collective Adaptation and Financial Instability," GREDEG Working Papers 2016-15, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), University of Nice Sophia Antipolis.
    10. Pascal Seppecher & Isabelle Salle & Dany Lang, 2016. "Is the Market Really a Good Teacher? Market Selection, Collective Adaptation and Financial Instability," GREDEG Working Papers 2016-15, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), University of Nice Sophia Antipolis.
    11. Mauro Napoletano & Andrea Roventini & Jean Luc Gaffard, 2015. "Toward a low carbon growth in Mexico : is a double dividend possible ? A dynamic general equilibrium assessment," Documents de Travail de l'OFCE 2015-25, Observatoire Francais des Conjonctures Economiques (OFCE).
    12. Emanuele Russo, 2017. "Harrodian instability in decentralized economies: an agent-based approach," LEM Papers Series 2017/17, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    13. Li, Boyao, 2017. "The impact of the Basel III liquidity coverage ratio on macroeconomic stability: An agent-based approach," Economics Discussion Papers 2017-2, Kiel Institute for the World Economy (IfW).
    14. Kirschenmann, Karolin & Malinen, Tuomas & Nyberg, Henri, 2016. "The risk of financial crises: Is there a role for income inequality?," Journal of International Money and Finance, Elsevier, vol. 68(C), pages 161-180.

    More about this item


    Agent-based modelling; Deleveraging crisis; Opinion dynamics; Prices-wages dynamics;

    JEL classification:

    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian
    • 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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