English
 
Privacy Policy Disclaimer
  Advanced SearchBrowse

Item

ITEM ACTIONSEXPORT
 
 
DownloadE-Mail
  Emergent inequality and business cycles in a simple behavioral macroeconomic model

Asano, Y. M., Kolb, J. J., Heitzig, J., Farmer, J. D. (2021): Emergent inequality and business cycles in a simple behavioral macroeconomic model. - Proceedings of the National Academy of Sciences of the United States of America (PNAS), 118, 27, e2025721118.
https://doi.org/10.1073/pnas.2025721118

Item is

Files

show Files
hide Files
:
Asano et al. - 2019 - Emergent inequality and endogenous dynamics in a simple behavioral macroeconomic model-1.pdf (Any fulltext), 916KB
 
File Permalink:
-
Name:
Asano et al. - 2019 - Emergent inequality and endogenous dynamics in a simple behavioral macroeconomic model-1.pdf
Description:
-
Visibility:
Private
MIME-Type / Checksum:
application/pdf
Technical Metadata:
Copyright Date:
-
Copyright Info:
-
License:
-
:
25901.pdf (Publisher version), 13MB
 
File Permalink:
-
Name:
25901.pdf
Description:
-
Visibility:
Private (embargoed till 2022-02-01)
MIME-Type / Checksum:
application/pdf
Technical Metadata:
Copyright Date:
-
Copyright Info:
-
License:
-

Locators

show

Creators

show
hide
 Creators:
Asano, Yuki M.1, Author              
Kolb, Jakob Johannes1, Author              
Heitzig, Jobst1, Author              
Farmer, J. Doyne2, Author
Affiliations:
1Potsdam Institute for Climate Impact Research, Potsdam, ou_persistent13              
2External Organizations, ou_persistent22              

Content

show
hide
Free keywords: endogenous business cycles; social learning; computational simulation
 Abstract: Standard macroeconomic models assume that households are rational in the sense that they are perfect utility maximizers and explain economic dynamics in terms of shocks that drive the economy away from the steady state. Here we build on a standard macroeconomic model in which a single rational representative household makes a savings decision of how much to consume or invest. In our model, households are myopic boundedly rational heterogeneous agents embedded in a social network. From time to time each household updates its savings rate by copying the savings rate of its neighbor with the highest consumption. If the updating time is short, the economy is stuck in a poverty trap, but for longer updating times economic output approaches its optimal value, and we observe a critical transition to an economy with irregular endogenous oscillations in economic output, resembling a business cycle. In this regime households divide into two groups: poor households with low savings rates and rich households with high savings rates. Thus, inequality and economic dynamics both occur spontaneously as a consequence of imperfect household decision-making. Adding a few “rational” agents with a fixed savings rate equal to the long-term optimum allows us to match business cycle timescales. Our work here supports an alternative program of research that substitutes utility maximization for behaviorally grounded decision-making.

Details

show
hide
Language(s):
 Dates: 2021-05-312021-07-022021-07-06
 Publication Status: Finally published
 Pages: -
 Publishing info: -
 Table of Contents: -
 Rev. Type: Peer
 Identifiers: DOI: 10.1073/pnas.2025721118
PIKDOMAIN: RD4 - Complexity Science
Organisational keyword: FutureLab - Game Theory & Networks of Interacting Agents
MDB-ID: No data to archive
Research topic keyword: Economics
Research topic keyword: Inequality and Equity
Regional keyword: Global
Model / method: Agent-based Models
Model / method: Nonlinear Data Analysis
Model / method: Decision Theory
 Degree: -

Event

show

Legal Case

show

Project information

show

Source 1

show
hide
Title: Proceedings of the National Academy of Sciences of the United States of America (PNAS)
Source Genre: Journal, SCI, Scopus, p3
 Creator(s):
Affiliations:
Publ. Info: -
Pages: - Volume / Issue: 118 (27) Sequence Number: e2025721118 Start / End Page: - Identifier: CoNE: https://publications.pik-potsdam.de/cone/journals/resource/journals410
Publisher: National Academy of Sciences (NAS)