Real and financial crises in the Keynes–Kalecki structuralist model: An agent‐based approach
Year: 2018
Type: article
Abstract: Agent‐based models are inherently microstructures—with their attention to agent behavior in a field context—and only aggregate up to systems with recognizable macroeconomic characteristics. One might ask why the traditional Keynes–Kalecki or structuralist (KKS) model would bear any relationship to the multi‐agent modeling approach. This paper shows how KKS models might benefit from agent‐based microfoundations, without sacrificing traditional macroeconomic themes, such as aggregate demand, animal spirits and endogenous money. Above all, the integration of the two approaches gives rise to the possibility that a KKS system—stable over many consecutive time periods—might lurch into an uncontrollable downturn, from which a recovery would require outside intervention. As a by‐product of the integration of these two popular approaches, there emerges a cogent analysis of the network structure necessary to bind real and financial agents into an integrated whole. It is seen, contrary to much of the existing literature, that a highly connected financial system does not necessarily lead to more crashes of the integrated system.
Source: Metroeconomica
DOI: 10.1111/meca.12201
Authors: Bill Gibson, Mark Setterfield
Institutions: University of Vermont, The New School
Language: English
Topic: Economic Theory and Policy
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2200796523