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Monetary Policy Experiments in an Artificial Multi-Market Economy with Reservation Wages

Marco Raberto (), Andrea Teglio and Silvano Cincotti ()
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Silvano Cincotti: University of Genova

Chapter 3 in Artificial Markets Modeling, 2007, pp 33-44 from Springer

Abstract: Abstract The agent-based framework provides an useful computational facility for economics, where performing experiments on policy design issues in a realistic environment, characterized by non-clearing markets and bounded rational agents (see Tesfatsion and Judd, 2006, for a recent survey). Under this respect, this study addresses the issue of monetary policy design by investigating an appropriate rule for the central bank interest rate. Our work consists in pursuing a general equilibrium approach to the problem by considering a multi-market economy characterized by a goods, a labor and a credit market, where agents are price makers on the supply side and act according to sensible rules of thumb. A previous paper (Raberto et al., 2006) by the authors showed the absence of real effects of monetary policy in an agent-based model characterized by price-taking agents. However, if agents are price makers, prices may be set far away from their market clearing values, thereby allowing potential real effects of monetary policy.

Keywords: Monetary Policy; Labor Supply; Trade Union; Real Wage; Nominal Interest Rate (search for similar items in EconPapers)
Date: 2007
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DOI: 10.1007/978-3-540-73135-1_3

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