Debt-Driven Business Cycles in a Stock-Flow Consistent Agent-Based Model

Florian Botte () and Edouard Cottin-Euziol ()
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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
Edouard Cottin-Euziol: IASS - Institute for Advanced Sustainability Studies [Potsdam]

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Abstract: This paper studies the effects of firms' indebtedness on the dynamics of a monetary production economy. Starting from the work of Minsky and Palley, we build a stock-flow consistent agent-based model that emphasizes the effects of firms' debt on macro dynamics and produce endogenous business cycles. We identify two effects of debt: an aggregate demand increasing effect and a functional income distribution effect and describe their consequences during the different phases of the cycle. These effects are specific to this study but are compatible with the existing literature.

Keywords: Agent-based modelling and simulation; Stock flow consistent models; Endogenous business cycles; Instability; Debt (search for similar items in EconPapers)
Date: 2016-08-01
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Persistent link: https://EconPapers.repec.org/RePEc:hal:wpaper:hal-01363313

DOI: 10.13140/RG.2.2.23744.53765

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