Optimal Inflation Target: Insights from an Agent-Based Model

Which level of inflation should Central Banks be targeting? We investigate this issue in the context of a simplified Agent Based Model of the economy. Depending on the value of the parameters that describe the behaviour of agents (in particular inflation anticipations), we find a rich variety of behaviour at the macro-level. Without any active monetary policy, our ABM economy can be in a high inflation/high output state, or in a low inflation/low output state. Hyper-inflation, deflation and "business cycles" between coexisting states are also found. We then introduce a Central Bank with a Taylor rule-based inflation target, and study the resulting aggregate variables. Our main result is that too-low inflation targets are in general detrimental to a CB-monitored economy. One symptom is a persistent under-realisation of inflation, perhaps similar to the current macroeconomic situation. Higher inflation targets are found to improve both unemployment and negative interest rate episodes. Our results are compared with the predictions of the standard DSGE model.Comment: 19 pages, 6 figures. The paper is under review for the online journal "Economics". The reviews are public at this link: http://www.economics-ejournal.org/economics/discussionpapers/2017-64 . This version has been modified and improved following the advice of the reviewers and commentator

Monetary Policy and Dark Corners in a stylized Agent-Based Model

We extend in a minimal way the stylized model introduced in in "Tipping Points in Macroeconomic Agent Based Models" [JEDC 50, 29-61 (2015)], with the aim of investigating the role and efficacy of monetary policy of a `Central Bank' that sets the interest rate such as to steer the economy towards a prescribed inflation and employment level. Our major finding is that provided its policy is not too aggressive (in a sense detailed in the paper) the Central Bank is successful in achieving its goals. However, the existence of different equilibrium states of the economy, separated by phase boundaries (or "dark corners"), can cause the monetary policy itself to trigger instabilities and be counter-productive. In other words, the Central Bank must navigate in a narrow window: too little is not enough, too much leads to instabilities and wildly oscillating economies. This conclusion strongly contrasts with the prediction of DSGE models.Comment: Contribution to the CRISIS project, 25 pages, 21 figures, pseudo-code of the model, revised and improved versio

Spontaneous instabilities and stick-slip motion in a generalized Hebraud-Lequeux model

We revisit the H\'ebraud-Lequeux (HL) model for the rheology of jammed materials and argue that a possibly important time scale is missing from HL's initial specification. We show that our generalization of the HL model undergoes interesting oscillating instabilities for a wide range of parameters, which lead to intermittent, stick-slip flows under constant shear rate. The instability we find is akin to the synchronization transition of coupled elements that arises in many different contexts (neurons, fireflies, financial bankruptcies, etc.). We hope that our scenario could shed light on the commonly observed intermittent, serrated flows of glassy materials under shear.Comment: 9 pages, 3 figure

Techno-legal entanglements as new actors in the policy-making process

The mechanisms by which Information and Communication Technologies (ICTs) support public sector reforms have been widely studied in e-government literature. This paper contributes to this literature analyzing how the entanglement of law and technological systems shapes the trajectory of policy-making. The paper discusses the case of the policy-making which led to the approval of changes in key articles of the Italian Digital Administration Code (DAC). The paper contributes to the e-government literature highlighting that the policy-making choices and options are constrained by how previous law and technology have been entangled to support the digitalization of the public administration. The paper provides valuable insights to better understand the impacts associated with the digitalization of the public administration, specifically of legal norms and procedures, on policy-making processes

Artificial intelligence and decision-making: the question of accountability

Public sector organizations literature has addressed the influence of AI on decision-making process, looking mainly at rationalization and efficiency. However, recent adoptions of AI have been challenged because of their discriminatory nature. As a result, questions emerged on the accountability of AI supported decision-making processes in the public sector. This research sheds light on how AI transforms decision-making processes in the public sector and hence on their accountability. The paper illustrates that AI adoptions lead to the emergency of techno-legal entanglements - assemblages - which might impact upon AI accountability. Building on the findings of some of the most controversial and discussed cases of AI adoption in the public sector - COMPAS in the US and UKVI in the UK - the paper makes the case for a new approach to AI supported public sector decision-making accountability

Policymaking in time of Covid-19: how the rise of techno-institutional inertia impacts the design and delivery of ICT-mediated policies

The paper theorizes the emergence of techno-institutional inertia within public organizations. Specifically, it analyses the impact of techno-institutional inertia on policymaking in emergency time. The paper extends the literature on inertia in organizations to shed light on the inertia triggered by both human actors and technology. Techno-institutional inertia provides useful instruments to better understand how imbrications between technology, policies, and institutions shape the design and the delivery of public policies. The paper builds on the findings from a case study of the Peruvian public sector, analyzing the techno-institutional inertia which shaped the provision of public services to contrast the effects of the Covid-19 pandemic. The paper offers valuable insights for policymakers who aim to adopt ICT-based policies in contexts characterized by scarcity of time and resources

Navigating public values: how the social construction of technology among public managers defines the nature of public values: findings from a Japanese e-government project

E-government literature has widely investigated how different understandings of technology impact on the trajectory of technology-based policies and projects. Yet, limited attention has been given to the effects that the social construction of technology has on the public values that public organizations aim to achieve through e-government projects. Building on technological frames theory, the paper aims to offer a contribution to public value literature: we show how different understandings of technology within public organizations define the nature of the public values related to policies and projects. The paper relies on the findings of a Japanese government web portal case to illustrate how the different frames of technology forced the public managers to rethink the organization strategy, and how this had an effect on the transformation and change of the public values the e-government project aimed to achieve

Endogenous crisis waves: a stochastic model with synchronized collective behavior

We propose a simple framework to understand commonly observed crisis waves in macroeconomic Agent Based models, that is also relevant to a variety of other physical or biological situations where synchronization occurs. We compute exactly the phase diagram of the model and the location of the synchronization transition in parameter space. Many modifications and extensions can be studied, confirming that the synchronization transition is extremely robust against various sources of noise or imperfections.Comment: 5 pages, 3 figures. This paper is part of the CRISIS project, http://www.crisis-economics.e