E Pluribus Unum: Macroeconomic modelling for multi-agent economies

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20 Citations (Scopus)

Abstract

From the macroeconomist's viewpoint, agent based modelling has an obvious drawback: it makes impossible to think in aggregate terms. The modeller, in fact, can reconstruct aggregate variables only “from the bottom up” by summing the levels of a myriad of individual variables. We propose a modelling strategy which reduces the dimensionality of an agent based framework by replacing the actual distribution with the first and higher moments of the distribution itself. We put this strategy at work in a Macroeconomic and Agent Based Model (M&ABM) of the financial accelerator in which firms' heterogeneous degrees of financial robustness affect investment in a Greenwald-Stiglitz setting.
Original languageEnglish
Pages (from-to)1659-1682
Number of pages24
JournalJOURNAL OF ECONOMIC DYNAMICS & CONTROL
Volume37
DOIs
Publication statusPublished - 2013

Keywords

  • Business Fluctutations
  • Financial Fragility
  • Heterogeneity
  • Stochastic Aggregation

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