E Pluribus Unum: Macroeconomic modelling for multi-agent economies

Authored by Tiziana Assenza

Date Published: 2013-08

DOI: 10.1016/j.jedc.2013.04.010

Sponsors: European Union

Platforms: No platforms listed

Model Documentation: Other Narrative Mathematical description

Model Code URLs: Model code not found

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. (C) 2013 Elsevier B.V. All rights reserved.

Tags

Heterogeneity Business Fluctuations Financial fragility Stochastic aggregation