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Flexibility of wages and macroeconomic instability in an agent-based computational model with endogenous money

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  • 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 - UCA - Université Côte d'Azur)

Abstract

We present a model of a dynamic and complex economy in which the creation and the destruction of money result from interactions between multiple and heterogeneous agents. In the baseline scenario, we observe the stabilization of the income distribution between wages and profits. We then alter the model by increasing the flexibility of wages. This change leads to the formation of a deflationary spiral. Aggregate activity decreases and the unemployment increases. The macroeconomic stability of the model is affected and eventually a systemic crisis arises. Finally, we show that the introduction of a minimum wage would have allowed the aggregate demand to be boosted and to avoid this crisis.
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Suggested Citation

  • Pascal Seppecher, 2012. "Flexibility of wages and macroeconomic instability in an agent-based computational model with endogenous money," Post-Print halshs-00727050, HAL.
  • Handle: RePEc:hal:journl:halshs-00727050 DOI: 10.1017/S1365100511000447 Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00727050
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    1. Pascal Seppecher, 2010. "Dysfonctionnement bancaire, bulle du crédit et instabilité macroéconomique dans une économie monétaire dynamique et complexe," Revue économique, Presses de Sciences-Po, vol. 61(3), pages 441-449.
    2. Pascal Seppecher, 2009. "Un modèle macroéconomique multi-agents avec monnaie endogène," Working Papers halshs-00370716, HAL.
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