Tipping points in macroeconomic agent-based models
Stanislao Gualdi
(Laboratoire MAS, Ecole Centrale Paris)
| When |
Jan 23, 2015
from 10:45 to 12:00 |
|---|---|
| Where | room 115 |
| Attendees |
Stanislao Gualdi |
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Traditional approaches in economics rely on the assumption that economic agents are identical, non-interacting and rational.
Within this framework, economic instabilities would require large exogenous shocks, when in fact small local shocks can trigger large systemic effects when heterogeneities and interactions are taken into account. The need to include these effects motivate the development of agent-based models (ABMs), which are extremely versatile and allow to take into account more realistic behavioural rules. In this talk we introduce a simple ABM, explore the possible types of phenomena that it can reproduce and propose a methodology that characterizes a model through its phase diagram. We then generalize the model with the aim of investigating the role and efficacy of the monetary policy of a central bank. We show that the existence of different equilibrium states of the economy can cause the monetary policy itself to trigger instabilities and be counter-productive.