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Demand, credit and macroeconomic dynamics: A microsimulation model

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Listed:
  • Meijers H.

    () (UNU-MERIT, and SBE, Maastricht University)

  • Nomaler Z.O.

    () (UNU-MERIT, and TU Eindhoven)

  • Verspagen B.

    () (UNU-MERIT)

Abstract

We develop a microsimulation model for the macroeconomic business cycle. Our model is based on three main ideas; i we want to specify how macroeconomic coordination is achieved without a dominating influence of price mechanisms, ii we want to incorporate the stock-flow-consistent approach that has become popular in post-Keynesian macroeconomics, and iii we want to allow for bankruptcies as a major mechanism in the business cycle. Compared to existing stock-flow-consistent models, our model has relatively few equations. It is operationalized using micro, agent-based simulation. The results show a clear business cycle that is driven by accumulation of financial assets and the effects this has on the real economy. By changing some of the key parameters, we show how the nature of the business cycle changes as a result of changes in the assumed behaviour of agents.

Suggested Citation

  • Meijers H. & Nomaler Z.O. & Verspagen B., 2014. "Demand, credit and macroeconomic dynamics: A microsimulation model," MERIT Working Papers 047, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  • Handle: RePEc:unm:unumer:2014047
    as

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    References listed on IDEAS

    as
    1. Peter Howitt, 2006. "The Microfoundations of the Keynesian Multiplier Process," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 1(1), pages 33-44, May.
    2. Dosi, Giovanni & Fagiolo, Giorgio & Roventini, Andrea, 2010. "Schumpeter meeting Keynes: A policy-friendly model of endogenous growth and business cycles," Journal of Economic Dynamics and Control, Elsevier, vol. 34(9), pages 1748-1767, September.
    3. Silverberg, Gerald & Verspagen, Bart, 1994. "Collective Learning, Innovation and Growth in a Boundedly Rational, Evolutionary World," Journal of Evolutionary Economics, Springer, vol. 4(3), pages 207-226, September.
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    More about this item

    Keywords

    Demand; Credit; Economic dynamics; Macroeconomics; Price mechanisms; Stock-flow; Bankrupties; Business cycles; Agent-based simulation; Microsimulation;

    JEL classification:

    • E00 - Macroeconomics and Monetary Economics - - General - - - General
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • B50 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - General
    • B52 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Historical; Institutional; Evolutionary

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