Agent-Based Macroeconomics

Dawid, Herbert; Gatti, Domenico Delli

doi:10.2139/ssrn.3112074

Cited by 84 publications

(109 citation statements)

References 140 publications

(187 reference statements)

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“…Dawid and Delli Gatti [3] propose seven major families of agent-based modeling and its applications in public policy and economics. PolicySpace [6] is a proposal of economic-spatial modeling that fits the Lengnick [13,8] family.…”

Section: Methodology: Agent-based Modelingmentioning

confidence: 99%

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Modeling Tax Distribution in Metropolitan Regions with PolicySpace

Furtado¹

2019

JPCS

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Brazilian executive body has consistently vetoed legislative initiatives easing creation and emancipation of municipalities. The literature lists evidence of the negative results of municipal fragmentation, especially so for metropolitan regions. In order to provide evidences for the argument of metropolitan union, this paper quantifies the quality of life of metropolitan citizens in the face of four alternative rules of distribution of municipal tax collection. Methodologically, a validated agent-based spatial model is simulated. On top of that, econometric models are tested using real exogenous variables and simulated data. Results suggest two central conclusions. First, the progressiveness of the Municipal Participation Fund and its relevance to a better quality of life in metropolitan municipalities is confirmed. Second, municipal financial merging would improve citizens' quality of life, compared to the status quo for 23 Brazilian metropolises. Further, the paper presents quantitative evidence that allows comparing alternative tax distributions for each of the 40 simulated metropolises, identifying more efficient forms of fiscal distribution and contributing to the literature and to contemporary parliamentary debate.

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Section: Methodology: Agent-based Modelingmentioning

confidence: 99%

“…In another parliamentary attempt, Senate Bill 199 of 2015 was approved in plenary and it is in process of urgency as Draft Complementary Law 137/2015 of the Chamber of Deputies having received six other initiative attachments. 3 .…”

Section: Context and Literaturementioning

confidence: 99%

Modeling Tax Distribution in Metropolitan Regions with PolicySpace

Furtado¹

2019

JPCS

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“…Once complexity is seriously taken into account in macroeconomics, one of course has to rule out DSGE models. A natural alternative candidate is agent-based computational economics (ACE, Tesfatsion, 2006;LeBaron and Tesfatsion, 2008;Dawid and Delli Gatti, 2018;Caverzasi and Russo, 2018), which straightforwardly embeds heterogeneity, bounded rationality, endogenous out-of-equilibrium dynamics, and direct interactions among economic agents. In that, ACE provides an alternative way to build macroeconomic models with genuine microfoundations, which take seriously the problem of aggregation and are able to jointly account for the emergence of self-sustained growth and business cycles punctuated by major crises.…”

Section: Towards a Complexity Macroeconomicsmentioning

confidence: 99%

“…With the adoption of the Monte Carlo methods, ABMs flourished in many disciplines ranging from physics, biology, ecology, epidemiology, all the way to the military (more on that in Turrell, 2016). The last years have also seen a surge of agent-based models in macroeconomics (see Fagiolo and Roventini, 2012and Dawid and Delli Gatti, 2018 for surveys): an increasing number of papers involving macroeconomic ABMs have addressed fiscal policy, monetary policy, macroprudential policy, labor market policy, and climate change. 2019, and studying the implications for monetary policy (Salle et al, 2019) and macroprudential regulation (Raberto et al, 2019).…”

Section: Towards a Complexity Macroeconomicsmentioning

confidence: 99%

More is different ... and complex! the case for agent-based macroeconomics

2019

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This work nests the Agent-Based macroeconomic perspective into the earlier history of macroeconomics. We discuss how the discipline in the 70's took a perverse path relying on models grounded on fictitious rational representative agent in order to try to pathetically circumvent aggregation and coordination problems. The Great Recession was a natural experiment for macroeconomics, showing the inadequacy of the predominant theoretical framework grounded on DSGE models. After discussing the pathological fallacies of the DSGE-based approach, we claim that macroeconomics should consider the economy as a complex evolving system, i.e. as an ecology populated by heterogenous agents, whose far-from-equilibrium interactions continuously change the structure of the system. This in turn implies that more is different: macroeconomics cannot be shrink to representative-agent micro, but agents' complex interactions lead to emergence of new phenomena and hierarchical structure at the macro level. This is what is taken into account by agent-based models, which provide a novel way to model complex economies from the bottom-up, with sound empirically-based microfoundations. We present the foundations of Agent-Based macroeconomics and we discuss how the contributions of this special issue push its frontier forward. Finally, we conclude by discussing the ways ahead for the fully acknowledgement of agent-based models as the standard way of theorizing in macroeconomics.

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“…The literature on agent‐based macroeconomics has been blossoming in the recent years, see for example, Fagiolo and Roventini (, ) or Dawid and Delli Gatti () for recent surveys. See also Sinitskaya and Tesfatsion () and Salle () for two investigations of non‐RE rules in agent‐based frameworks.…”

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confidence: 99%

Rational Heuristics? Expectations and Behaviors in Evolving Economies With Heterogeneous Interacting Agents

et al. 2020

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We analyze the individual and macroeconomic impacts of heterogeneous expectations and action rules within an agent-based model populated by heterogeneous, interacting firms. Agents have to cope with a complex evolving economy characterized by deep uncertainty resulting from technical change, imperfect information, coordination hurdles, and structural breaks. In these circumstances, we find that neither individual nor macroeconomic dynamics improve when agents replace myopic expectations with less naïve learning rules. Our results suggest that fast and frugal robust heuristics may not be a second-best option but rather "rational" responses in complex and changing macroeconomic environments. (JEL C63, D8, E32, E6, O4)

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Agent-Based Macroeconomics

Cited by 84 publications

References 140 publications

Modeling Tax Distribution in Metropolitan Regions with PolicySpace

Modeling Tax Distribution in Metropolitan Regions with PolicySpace

More is different ... and complex! the case for agent-based macroeconomics

Rational Heuristics? Expectations and Behaviors in Evolving Economies With Heterogeneous Interacting Agents

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