TI Complexity in Economics Seminars

Speaker(s)
Domenico Delli Gatti (Catholic University in Milan, Italy)
Date
Wednesday, 5 February 2014
Location
Amsterdam

In this paper we present and discuss a Macroeconomic Agent-Based Model (hereafter MABM) starting from a benchmark framework put forward in Delli Gatti et al. 2011. The main novelty of the present paper consists in the introduction of capital goods, so that firms can carry on investment (properly speaking) by purchasing machines and equipment from capital goods producers. The introduction of durability (capital installed depreciates gradually) has important consequences for the macroeconomic behavior of the economic system. Firms in the consumption goods sector (C-sector) produce consumption goods using labor and capital goods, supplied by capital producing firms. In the capital sector (K-sector) firms produce capital goods using only labor. Labor services are supplied by workers to both types of firms. Households buy consumption goods from C-firms and deposit their savings at banks, C-firms buy capital goods from K-firms. Both types of firms demand labor and loans. The simple two sector model is able to reproduce two-ways feedbacks between markets and sectors which yield interesting emerging properties at the macro level. Joint with Tiziana Assenza and Jakob Grazzini.