D. Delli Gatti
- E pluribus unum: macroeconomic modelling for multi-agent economies
- Journal of Economic Dynamics & Control
- Volume | Issue number
- 37 | 8
- Pages (from-to)
- Document type
- Faculty of Economics and Business (FEB)
- Amsterdam School of Economics Research Institute (ASE-RI)
From the macroeconomist's viewpoint, agent based modelling has an obvious drawback: it makes impossible to think in aggregate terms. The modeller, in fact, can reconstruct aggregate variables only "from the bottom up" by summing the levels of a myriad of individual variables. We propose a modelling strategy which reduces the dimensionality of an agent based framework by replacing the actual distribution with the first and higher moments of the distribution itself. We put this strategy at work in a Macroeconomic and Agent Based Model (M&ABM) of the financial accelerator in which firms' heterogeneous degrees of financial robustness affect investment in a Greenwald-Stiglitz setting.
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