Emergent Macroeconomics: An Agent-Based Approach to Business Fluctuations / Edition 1

by Domenico Gatti, Edoardo Gaffeo, Mauro Gallegati, Gianfranco Giulioni, Antonio Palestrini

Overview

by exploiting the disequilibrium and non linear relationships among economic aggregates. Prom an empirical point of view, this approach resemblaces the old NBER view, according to which: "the business cycle [. . . ] consists of - pansions occurring at about the same time in many economic activities, f- lowed by similairly general recessions, contractions, and revivals which merge into the expansion phase of the next cyxle" (Burns and Mitchell, 1946). They add that the movement, although recurrent, is not periodic, lasting from 1 to 12 years, and it is not divisible into shorter cycles. Of course, both approaches are not free from limits and inconsistencies. In spite of the equilibrium approach having nowadays became the workhorse of modern macroeconomics, for example, their users still find enormous d- ficulties in explaining why small shocks produce large fluctuations. A well known argument in multi sector real business cycle models (see e. g. Long and Plosser, 1983) is that as the number of sectors or industries considered in the analysis becomes large, aggregate volatility must tend to zero very quickly. This result, which follows directly from the Law of Large Numbers (LLN), rests on the hypothesis that each sector is periodically buffeted with idiosyncratic, identically and independently distributed shocks to Total F- tor Productivity (TFP).

Product Details

ISBN-13:	9788847015616
Publisher:	Springer Milan
Publication date:	12/21/2010
Series:	New Economic Windows
Edition description:	Softcover reprint of hardcover 1st ed. 2008
Pages:	114
Product dimensions:	6.10(w) x 9.25(h) x 0.36(d)

Table of Contents

Crucial Issues.- Stylized Facts of Industrial Dynamics: The Distribution of Firms’ Size.- Stylized Facts in Industrial Dynamics: Exit, Productivity, Income.- An Agent-based Model.- Where Do We Go from Here?.