Causal analysis of demand-side economic growth sources using agent-based modelling

Szymon Chudziak

No 2026-117, KAE Working Papers from Warsaw School of Economics, Collegium of Economic Analysis

Abstract: Research on economic growth has been focused predominantly on production and innovation. The issue of how the funds of consumers and firms grow enough to enable the growth of nominal and real sales has been clouded either by the general equilibrium assumption or end-of-period measure of stock-flow consistency. Both imply that households and firms purchase the increased production using revenues from the very sales that generated them. In this paper, a financially and timing robust mechanism of growth of demand and funds available for spending is proposed. The fundamental mechanism is the sustainable, non-Ponzi, growth of value of new consumer and investment loans. It is proven why that is the case, and demonstrated that growth can occur only under stringent conditions concerning solvency and initial growth rates’ values. The proposed initialisation consistency procedure, among else, eliminates the burn-in periods problem. Results show nonlinear dependence of growth rates on the sizes of new debts and debt durations. Economic growth is the fastest when either the firms' or the consumers' sector takes out relatively large loans, but not both. While multiperiod debts are necessary for the growth process and long debt durations make more scenarios from the grid of parameters possible, they do not guarantee the fastest growth, the relation between debt duration, sizes of debts relative to incomes, and output/sales growth rates is nonlinear. The multiplier relation between growing income and spending, as well as endogenous behavioural spending are identified as second-order determinants of growth.

Keywords: Economic growth; new loans; debt polynomial; spending behaviour (search for similar items in EconPapers)
JEL-codes: E51 G51 O40 O41 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2026-01
New Economics Papers: this item is included in nep-gro
References: Add references at CitEc
Citations:

Downloads: (external link)
https://hdl.handle.net/20.500.12182/1435 (application/pdf)
Our link check indicates that this URL is bad, the error code is: 403 Forbidden (https://hdl.handle.net/20.500.12182/1435 [302 Found]--> https://cor.sgh.waw.pl/handle/20.500.12182/1435 [302 Moved Temporarily]--> https://www.sgh.waw.pl/komunikat-vpn)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:sgh:kaewps:2026117

DOI: 10.33119/kaewps2026117

Access Statistics for this paper

More papers in KAE Working Papers from Warsaw School of Economics, Collegium of Economic Analysis Contact information at EDIRC.
Bibliographic data for series maintained by Dariusz Nojszewski ().