Industrial dynamics, fiscal policy and R&D: Evidence from a computational experiment

Abstract

NutzungsbedingungenThis is a PDF file of an unedited manuscript that has been accepted for publication. As a service to our customers we are providing this early version of the manuscript. The manuscript will undergo copyediting, typesetting, and review of the resulting proof before it is published in its final form. Please note that during the production process errors may be discovered which could affect the content, and all legal disclaimers that apply to the journal pertain.A c c e p t e d M a n u s c r i p t AbstractWe present an agent-based computational model in which bounded rational firms and workers trade on fully decentralized markets for final goods and labor by means of random matching protocols. The model replicates several macroeconomic phenomena regularly observed in the data, with aggregate features emerging from the localized interactions of individual entities. The model is then used as a computational laboratory to run an experiment on the role of fiscal policy in increasing macroeconomic performance.

Agent-Based Macroeconomics and Classical Political Economy: Some Italian Roots

“…If the latter are still positive after paying back the loan and the interest to the bank, firms pay dividend. In some version of the CATS model (Russo et al, 2007;Delli Gatti et al, 2011, e.g. ), firms invest a part of the profits in R&D to increase labor productivity.…”

“…When firms are allowed to invest in R&D to spur their labor productivity (Russo et al, 2007;Delli Gatti et al, 2011, e.g. ), endogenous growth emerges.…”

“…Fiscal interventions have been firstly studied in Russo et al (2007), where, in a balancedbudget framework, the government employs the collected taxes to provide either unemployment benefits or R&D subsidys to firms. Simulation results show that redistributive policies have a negative impact on long-run economic growth as they reduce firms' investment in innovation.…”

Macroeconomic Policy in DSGE and Agent-Based Models Redux: New Developments and Challenges Ahead

“…Finally, austerity policies can also reduce long-run productivity and GDP growth, by harming innovation rate and the diffusion of new technologies (Dosi et al, 2014b) and firms' investment rates (Bassi and Lang, 2016). In fact, stabilization policies can affect both short-and long-run dynamics as found also by Russo et al (2007) and Harting (2015).…”

Fiscal Transfers and Regional Economic Growth

“…Close to the topic of our paper are, on the one hand, studies of the effects of fiscal policy on growth and, one the other hand, papers exploring the dynamic interaction between regions using an agent-based approach. Russo et al (2007) compare the effects of fiscal policies focusing on strengthening demand or fostering technological change in a simple single-region agent-based macroeconomic framework finding that only the latter has positive implications for growth. In the framework of the 'Keynes meeting Schumpeter' class of agent-based macroeconomic models Dosi et al (2013) observe a positive effect of expansionary fiscal policy, which is oriented towards strengthening demand, for growth and, consistent with these insights, the authors find in 2 See, e.g., the interview with Barry Eichengreen at http://www.handelsblatt.com/politik/international/ barry-eichengreen-zur-schuldenkrise-griechenland-braucht-einen-marshallplan/ 12006770.html Dosi et al (2015) that policies requiring fiscal cuts in case of high public debts or deficits are detrimental for growth.…”