Agent-based modeling at central banks: recent developments and new challenges

András Borsos, Adrian Carro, Aldo Glielmo, Marc Hinterschweiger, Jagoda Kaszowska-Mojsa and Arzu Uluc
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András Borsos: Magyar Nemzeti Bank, Complexity Science Hub Vienna and University of Oxford
Adrian Carro: Banco de España and University of Oxford
Jagoda Kaszowska-Mojsa: University of Oxford, Narodowy Bank Polski and Polish Academy of Sciences
Arzu Uluc: Bank of England

No 2503, Occasional Papers from Banco de España

Abstract: Over the past decade, agent-based models (ABMs) have been increasingly employed as analytical tools within economic policy institutions. This paper documents this trend by surveying the ABM-relevant research and policy outputs of central banks and other related economic policy institutions. We classify these studies and reports into three main categories: (i) applied research connected to the mandates of central banks; (ii) technical and methodological research supporting the advancement of ABMs; and (iii) examples of the integration of ABMs into policy work. Our findings indicate that ABMs have emerged as effective complementary tools for central banks in carrying out their responsibilities, especially after the extension of their mandates following the global financial crisis of 2007-2009. While acknowledging that room for improvement remains, we argue that integrating ABMs into the analytical frameworks of central banks can support more effective policy responses to both existing and emerging economic challenges, including financial innovation and climate change.

Keywords: agent-based models; central bank policies; monetary policy; financial stability; prudential policies; payment systems (search for similar items in EconPapers)
JEL-codes: C63 E27 E37 E42 E58 G10 G21 G23 G51 Q54 R21 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2025-02
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Persistent link: https://EconPapers.repec.org/RePEc:bde:opaper:2503e

DOI: 10.53479/39238

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