Bubbles, Crashes, and the Financial Cycle: The Impact of Banking Regulation on Deep Recessions

Hoog, Sander van der; Dawid, Herbert

doi:10.1017/s1365100517000219

Cited by 28 publications

(14 citation statements)

References 44 publications

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“…Finally, Dawid et al (2019) discuss how to improve the transparency, reproducibility and replication of the results generated by ABMs employing the Eurace@Unibi model (Dawid et al, 2012(Dawid et al, , 2014(Dawid et al, , 2018avan der Hoog and Dawid, 2017). They describe in details all decision rules, interaction protocols and balance sheet structures used in the model, and provide a virtual appliance to allow the reproducibility of simulation results.…”

Section: Macroeconomic Agent-based Modelsmentioning

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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Section: Macroeconomic Agent-based Modelsmentioning

confidence: 99%

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

2019

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“…This paper addresses the question of possible links between different short-term stabilization policies and long-term growth by means of an agent-based policy analysis. The analysis is conducted with the closed and stock-flow consistent agent-based macro model Eurace@Unibi, which has especially been used for policy analyses in the context of regional convergence (e.g., Dawid et al (2014Dawid et al ( , 2018a) but also for the analysis of interactions between banking and credit regulations and business fluctuations (van der Hoog and Dawid, 2017). In order to make it better suitable for a policy discussion in the context of business cycles, the model has been extended in some respects with the result that the present model has an improved ability to generate endogenous business cycles with economically reasonable characteristics (see Section 3.9 for a discussion of the business cycle properties).…”

Section: The Overall Structurementioning

confidence: 99%

Macroeconomic Stabilization and Long-Term Growth: The Role of Policy Design

Harting

2019

Macroecon. Dynam.

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Do fiscal stabilization policies affect the long-term growth of the economy? If so, are the long-term effects growth enhancing or growth reducing? When addressing these questions from a theoretical perspective, the literature has typically emphasized the importance of structural aspects such as the modeling approach of endogenous technological change while paying less attention to an elaborate design of the considered fiscal stabilization policies. This paper uses an agent-based macroeconomic model that generates endogenous business cycles to emphasize the role of the policy design for long-term growth effects of stabilization policies. By comparing a demand-oriented consumption policy and two different investment subsidizing policies, it can be shown that these policies are successful in smoothing the business cycle but differ in terms of their effects on economic long-term growth. This highlights the importance of policy design for the analysis of long-term effects of stabilization policies.

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“…increased industry concentration on the aggregate or a diverging firm population on the industry-level. Rather, the focus of past research building on this model has been mainly on policy analysis in different areas Dawid et al, 2018;Van Der Hoog and Dawid, 2019;Harting, 2020), but also on the effect of networks on inequality dynamics (Dawid and Gemkow, 2014) or the diffusion of competing technologies in the context of climate change (Hötte, 2020a;Hötte, 2020b;Hötte, 2021).…”

Section: Introductionmentioning

confidence: 99%

Being Small at the Right Moment: Path Dependence after a Shift in the Technological Regime

Hepp

2020

SSRN Journal

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This paper explores the impact of technological change on industry concentration and the underlying firm dynamics. In the agent-based model EURACE@Unibi I implement a paradigm shift in the technological frontier -a shift from a slow to a fast growing regime.The analysis shows that the acceleration in technological change causes a strong increase in market concentration. The reallocation of market shares towards a few large firms is driven by diverging productivities and skills across firms. An ex-post analysis reveals that after the paradigm shift small, but undervalued firms become the large dominating ones in the long-run. Their success gets initiated by a fortunate outcome on the labor market, which increases their skill level. With the faster technological change, their high skilled workforce incentivizes them to invest at the frontier and to build up the most productive capital stock.A virtuous cycle between their decisions on the labor and capital market further increases the productivity gap towards competitors enabling their rise.

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Bubbles, Crashes, and the Financial Cycle: The Impact of Banking Regulation on Deep Recessions

Cited by 28 publications

References 44 publications

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

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

Macroeconomic Stabilization and Long-Term Growth: The Role of Policy Design

Being Small at the Right Moment: Path Dependence after a Shift in the Technological Regime

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