Agent-based macroeconomics - a baseline model

Matthias Lengnick

No 2011-04, Economics Working Papers from Christian-Albrechts-University of Kiel, Department of Economics

Abstract: This paper develops a baseline agent-based macroeconomic model and contrasts it with the common dynamic stochastic general equilibrium approach. Although simple, the model can reproduce a lot of the stylized facts of business cycles. The author argues that agent-based modeling is an adequate response to the recently expressed criticism of macroeconomic methodology. It does not depend on the strict assumption of rationality and allows for aggregate behavior that is more than simply a replication of microeconomic optimization decisions. At the same time it allows for absolutely consistent micro foundations. Most importantly, it does not depend on equilibrium assumptions or fictitious auctioneers and does therefore not rule out coordination failures, instability and crisis by definition.

Keywords: agent-based modeling; complex adaptive systems; microfoundations of macroeconomics (search for similar items in EconPapers)
JEL-codes: B4 E1 E50 (search for similar items in EconPapers)
Date: 2011
New Economics Papers: this item is included in nep-cba, nep-cbe, nep-cmp, nep-dge, nep-mac and nep-ore
References: View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Journal Article: Agent-based macroeconomics: A baseline model (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:cauewp:201104

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