Adaptive microfoundations for emergent macroeconomics

In this paper we present the basics of a research program aimed at providing microfoundations to macroeconomic theory on the basis of computational agentbased adaptive descriptions of individual behavior. To exemplify our proposal, a simple prototype model of decentralized multi-market transactions is offered. We show that a very simple agent-based computational laboratory can challenge more structured dynamic stochastic general equilibrium models in mimicking comovements over the business cycle.Microfoundations of macroeconomics, Agent-based economics, Adaptive behavior

Long-run consequences of debt in a stock-flow consistent network economy

In this paper we develop a theoretical framework to analyze the long-run behavior of an economy characterized by a regime of persistent debt. We introduce a stock-flow consistent dynamic model where the economic system is represented by a network of trading relationships among agents. Debt contracts are one of such relationships. The model is characterized by a unique and stable steady-state, which predicts that (i) aggregate income is always limited from the above by the money supply and that (ii) debts cause a redistribution of borrowers' wealth and income in favor of lenders. In the aggregate this may also lower nominal income, as empirical evidence suggests

Factor analysis with a single common factor

In this paper we present a simple approach to factor analysis to estimate the true correlations between observable variables and a single common factor. We first provide the exact formula for the correlations under the orthogonality conditions, and then we show how to consistently estimate them using a random sample and a proper instrumental variable

Sticky wages, labor demand elasticity and rational unemployment

In this paper we give a clear-cut explanation to the sluggish wage adjustments which are commonly experienced also in face of involuntary unemployment. We prove that unemployment may be the physiological outcome of rational decisions by competing workers who may find it optimal to ask higher wages than the full-employment ones. The key element driving the result is the slope (or elasticity) of labor demand schedule: in case of rigid labor demand, in fact, workers’ wage requests are kept high because of reduced unemployment opportunity costs. This contrasts with other approaches to the analysis of unemployment, where only the level of labor demand is considered. Impatience of working and effort required by the job are also showed to influence the degree of wage stickiness

Analysis of wealth inequality with a random money transfer model

Increasing gap in wealth distribution is among the key issues that have been discussed worldwide in recent years. In this paper, we use the money transfer model to explain the formation of wealth distribution, by imposing two types of debt constraints, and the analytic function of wealth distribution is derived by adopting Boltzmann statistics. With a limit of individual debt, it is shown that the stationary distribution of wealth follows the exponential law, which is verified by many empirical studies. While the limit is imposed on the total amount of bank loan, the stationary distribution becomes an asymmetric Laplace one. Furthermore, an excellent agreement is found between these analytical probability density functions and numerical results by simulation at the steady state

What moves the Beveridge curve and the Phillips curve: an agent-based analysis

Understanding what moves the Phillips curve is important to monetary policy. Because the Phillips curve has experienced over time movements similar to those characterizing the Beveridge curve, the authors jointly analyze the two phenomena. They do that through an agent-based macro model based on adaptive micro-foundations, which works fairly well in replicating a number of stylized facts, including the Beveridge curve, the Phillips curve and the Okun curve. By Monte Carlo experiments they explore the mechanisms behind the movements of the Beveridge curve and the Phillips curve. They discovered that shifts of the Beveridge curve are best explained by the intensity of worker reallocation. Reallocation also shifts the Phillips curve in the same direction, suggesting that it may be the reason behind the similarity of the patterns historically recorded for these two curves. This finding may shed new light on what moves the Phillips curve and might have direct implications for the conduction of monetary policy