The Eurace@Unibi Model: An Agent-Based Macroeconomic Model for Economic Policy Analysis

Abstract

This document provides a description of the modeling assumptions and economic features of the Eurace@Unibi model. Furthermore, the document shows typical patterns of the output generated by this model and compares it to empirically observable stylized facts. The Eurace@Unibi model provides a representation of a closed macroeconomic model with spatial structure. The main objective is to provide a micro-founded macroeconomic model that can be used as a unified framework for policy analysis in different economic policy areas and for the examination of generic macroeconomic research questions. In spite of this general agenda the model has been constructed with certain specific research questions in mind and therefore certain parts of the model, e.g. the mechanisms driving technological change, have been worked out in more detail than others.The purpose of this document is to give an overview over the model itself and its features rather than discussing how insights into particular economic issues can be obtained using the Eurace@Unibi model. The model has been designed as a framework for economic analysis in various domains of economics. A number of economic issues have been examined using (prior versions of) the model (see Dawid et al. (2008) (2010)) and recent extensions of the model have substantially extended its applicability in various economic policy domains, however results of such policy analyses will be reported elsewhere. Whereas the overall modeling approach, the different modeling choices and the economic rationale behind these choices is discussed in some detail in this document, no detailed description of the implementation is given. Such a detailed documentation is provided in the accompanying document Dawid et al. (2011b).

Emergent dynamics of a macroeconomic agent based model with capital and credit

“…For instance, in the EURACE framework (Cincotti et al (2010), Dawid et al (2011)) final goods producers use capital goods (supplied by K-firms) characterized by different qualities/productivities and hire workers characterized by different skills to produce and sell consumption goods to households. The use of high quality capital goods requires the employment of skilled workers, hence qualities of capital goods and skills of workers are complements in production.…”

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

“…Employing the EURACE model, Raberto et al (2012) find that lower capital-adequacy ratios can spur growth in the short-run, but the higher stock of private debt can lead to higher firm bankruptcies, credit rationing and more serious economic downturns in the long-run. The impact of capital and reserve requirements is studied in van der Hoog and Dawid (2015) with the Eurace@Unibi model (Dawid et al, 2012b). Simulation results show that stricter liquidity regulations are better suited to reduce output volatility and prevent deep downturns, whereas more stringent capital requirements obtain opposite results as they increases credit prociclicality.…”

Building Better Ecological Machines: Complexity Theory and Alternative Economic Models

“…Developed in concert with a team that includes the economist Joseph Stiglitz, EURACE stands for European Agent-Based Computational Economics, and it combines some of the policy aspects of common DSGE models with the benefits of ABMs like Schelling's segregation model. It was active from 2006-2009 as part of a European funded sixth framework project (Cincotti, Raberto, and Teglio 2012), and it continues to be updated, first as EURACE@UNIBI and currently as Symphony, which is ongoing (Dawid et al 2012;Project Symphony 2015). EURACE includes both financial and "real" economic markets, as well as a public sector.…”