Endogenous business cycles and Harrodian instability in an agent-based model

Florian Botte (florian.botte@ed.univ-lille1.fr)
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Florian Botte: CLERSÉ - Centre Lillois d’Études et de Recherches Sociologiques et Économiques - UMR 8019 - Université de Lille - CNRS - Centre National de la Recherche Scientifique

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Abstract: The article presents an original stock-flow consistent macroeconomic agent-based model with the aim to reexamine Harrod's instability principle as an explanatory element of macroeconomic dynamics. The main findings are that bottom-up economic models can be subject to Harrodian instability and can produce endogenous cycles without introducing innovation waves, monetary wage spirals, or financial instability. Upward instability is stopped by the ceiling of full employment, and downward instability can be tamed by introducing an autonomous expenditure that feeds aggregate demand.

Keywords: Agent-based modeling; stock-flow consistent models; endogenous business cycles; instability (search for similar items in EconPapers)
Date: 2018-10-05
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Published in Journal of Post Keynesian Economics, 2018, pp.1 - 23. ⟨10.1080/01603477.2018.1486206⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01908639

DOI: 10.1080/01603477.2018.1486206

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