Monetary policy and dark corners in a stylized agent-based model

On the Unsustainable Macroeconomy with Increasing Inequality of Firms Induced by Excessive Liquidity

“…Here we would only give a short introduction of the simulation results of Mark0. The detailed analysis and discussion on the phase diagram of Mark0 can be found in [10]. Although there exist nine parameters in Mark0, it is found that the status of the model economy is controlled by only two parameters, the liquidity parameter θ and hiring/firing propensity R = η + /η − which measures the ratio of amplitude of hiring and firing labor force.…”

“…The agent-based approach has been extensively used in physical, chemical, biological and social systems [24][25][26][27][28][29] to understand unexpected phenomena emerging from a group of heterogeneous and adaptive interacting agents. As a set of powerful tools in linking micro-behaviors to macro-phenomena in a class of complex adaptive systems, agent-based modeling and simulation have also been applied to the analyses of macroeconomic phenomena [10,23,[30][31][32][33][34][35][36][37][38]. Generally, we can differentiate the previous ABM studies into two categories.…”

“…The Mark0 version of CRISIS model is a typical minimal macroeconomic model [10], which consists of only two sectors, namely, firm and household, competing for a conserved pool of total wealth. Firms are further modeled as multiple interacting agents, while the household sector is kept as a representative agent.…”

“…Mark0 is kept simple to study the basic economic circulation between the demand and the supply of products [10,37]. Hence only two kinds of agents, household and firm, are involved.…”

“…As opposed to directly reaching some mathematical equations, a feasible starting point could be first investigating this problem in simulation experiments and to draw implications in a qualitative sense. Among the different kinds of models for macroeconomic system, a well-studied agent-based model (ABM), the Mark0 model propsed by Gualdi, et al [10], is chosen because of its controlled complexity and the flexibility for model extensions in the most straightforward way. Mark0 is a closed-system economy consisting of two sectors, firms and households, competing for a conserved amount of money through the supply and the demand of products.…”