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

Adrian Carro, Marc Hinterschweiger, Arzu Uluc, András Borsos, Jagoda Kaszowska-Mojsa () and Aldo Glielmo
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Jagoda Kaszowska-Mojsa: Institute for New Economic Thinking, University of Oxford
Aldo Glielmo: Bank of Italy

INET Oxford Working Papers from Institute for New Economic Thinking at the Oxford Martin School, University of Oxford

Abstract: Over the past decade, agent-based models (ABMs) have been increasingly employed as analytical tools within economic policy institutions. This chapter 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; household analysis; financial institutions; central bank policies; monetary policy; prudential policies (search for similar items in EconPapers)
JEL-codes: C63 E37 E58 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2025-02
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