nep-hme New Economics Papers
on Heterodox Microeconomics
Issue of 2016‒07‒09
twenty-two papers chosen by
Carlo D’Ippoliti
Università degli Studi di Roma “La Sapienza”

  1. Monetary Expressions of Labor Time and Market Prices: Theory and Evidence from China, Japan and Korea By Tsoulfidis, Lefteris; Paitaridis, Dimitris
  2. Propuesta de un sistema de equilibrio general clásico de los precios con capital circulante susceptible de ofrecer diversas calidades By Iván A. Montoya Restrepo; Luz Alexandra Montoya Restrepo
  3. A Confusion of Capital in the United States By O'Sullivan, Mary
  4. Prudential regulation in an artificial banking system By Curto, José Dias; Quinaz, Pedro Miguel Mateus Dias
  5. La política industrial en la Argentina durante la década de 2000 By Lavarello, Pablo José; Sarabia, Marianela
  6. Ownership, Pricing, and Productivity: Evidence from Electric Distribution Cooperatives By Hueth, Brent; Jang, Heesun
  7. Stock markets reconstruction via entropy maximization driven by fitness and density By Tiziano Squartini; Guido Caldarelli; Giulio Cimini
  8. Why (field) experiments on unethical behavior are important:Comparing stated and revealed behavior By Alem, Yonas; Eggert, Håkan; Kocher, Martin G.; Ruhinduka, Remidius D.
  9. La negociación colectiva: algunas reflexiones para el Uruguay de hoy By Arim, Rodrigo
  10. Global Value Chains and New Thinking on Trade and Industrial Policy By Xing Yuqing
  11. Caribbean synthesis review and appraisal report on the implementation of the Beijing Declaration and Platform for Action By Mondesire, Alicia
  12. JAS-mine: A new platform for microsimulation and agent-based modelling By Matteo Richiardi; Ross E Richardson
  13. Finance and System of Provision of Housing. The Case of Istanbul, Turkey By Ozlem Celik; Aylin Topal; Galip Yalman
  14. Growth scenarios for sub-Saharan countries in the framework of economic complexity By Cristelli, Matthieu; Tacchella, Andrea; Zaccaria, Andrea; Pietronero, Luciano
  15. Sostenibilidad y pesca responsable: las dimensiones social y económica, principios, objetivos e indicadores By Bertolotti, María Isabel
  16. Unverdientes Vermögen oder illegitimer Eingriff in das Eigentumsrecht? Der öffentliche Diskurs um die Erbschaftssteuer in Deutschland und Österreich By Beckert, Jens; Arndt, H. Lukas R.
  17. After the Financial Crisis; Reforms and Reform Options for Finance, Regulation and Institutional Structure By Hansjorg Herr
  18. Les institutions du welfare comme enjeu de la crise. Vers un welfare du commun By Carlo Vercellone
  19. Complex Systems and a Computational Social Science Perspective on the Labor Market By Abdullah Almaatouq
  20. A multilayer approach for price dynamics in financial markets By Alessio Emanuele Biondo; Alessandro Pluchino; Andrea Rapisarda
  21. Cultura e instituciones: ¿Una relación indisoluble? By Antonio Camargo Díaz
  22. No man is an island : the Impact of Heterogeneity and local interactions on Macroeconomic Dynamics By Mattia Guerini; Mauro Napoletano; Andrea Roventini

  1. By: Tsoulfidis, Lefteris; Paitaridis, Dimitris
    Abstract: This paper presents estimates of labor values and prices of production following two approaches: The first, based on the classical and Marxian theory of value and distribution; while, the second is based on the so-called new solution to the transformation problem and its variant the Temporary Single-System Interpretation (TSSI). The major advantage of the latter approach is its simplicity along with the relatively low data requirements. Our empirical findings from the economies of China, Japan and South Korea suggest that both approaches give estimates of labor values and prices of production which are extremely close to each other as well as to actual market prices. On further examination, however, we conclude that our empirical findings are absolutely consistent with the theoretical requirements of the classical approach and contradict those of the TSSI.
    Keywords: Marxian theory, labor theory of value, TSSI, vertical integration
    JEL: B00 B14 B16 B3 B5 B51 C67 D30 D4
    Date: 2016–06–25
  2. By: Iván A. Montoya Restrepo; Luz Alexandra Montoya Restrepo
    Abstract: Este artículo busca hacer una contribución para proponer un sistema de equilibrio general clásico de los precios con capital circulante susceptible de ofrecer diversas calidades, mediante la inclusión de probabilidades para que los insumos puedan entrar de manera efectiva para la elaboración de los productos. Tiene como antecedentes las aportaciones de Sraffa (I960), Cuevas (2001) y Montoya y Montoya (2005; 2007). El documento retoma las principales aportaciones hechas respecto a un sistema como el propuesto; posteriormente, busca introducir en el análisis el problema de la consideración de las calidades, inspirándose en las funciones de utilidad de Von Neumann- Morgenstern empleadas eneconomía de la información y, finalmente, presenta una propuesta y enuncia brevemente las principales implicaciones de la misma.
    Keywords: Economía clásica, capital circulante, formación de precios.
    JEL: A1 B4 E3
    Date: 2015–06–19
  3. By: O'Sullivan, Mary
    Abstract: Thomas Piketty’s book, Capital in the Twenty-First Century, reopens fundamental questions about the role and rewards of capital that economists have never resolved. It does so by exploring the history of capital and derives much of its credibility from the evidence it marshals in defence of its claims. In this paper, I evaluate the basis for Piketty’s arguments by considering them in light of the history of US capitalism. I argue that it is extremely difficult to make economic sense of Piketty’s historical analysis of capital in the US in the 19th and 20th centuries. That is true, only in part, due to the distinctive choices he makes, compared to mainstream economists, in defining and measuring capital. Much more problematic, in fact, are theoretical commitments he shares with them that preclude an understanding of capital’s historical role and rewards in the US economy. Based on a discussion of several important features of US economic history, I have argued that such an understanding demands an historical analysis of capital, both productive and financial capital, in relation to the evolving social organisation of capitalism in the US.
    Keywords: History of capital, Capitalism, Capital theory, Theory of distribution, Finance capital, Productive capital
    JEL: B00 D20 D21 D24 D33 D92 E13 N00 O00
    Date: 2016
  4. By: Curto, José Dias; Quinaz, Pedro Miguel Mateus Dias
    Abstract: This study constitutes an exploratory analysis of the economic role of banks under different prudential frameworks. It considers an agent-based computational model populated by consumers, firms, banks and a central bank whose out-of-equilibrium interactions replicate the conjunct dynamics of a banking system, a financial market and the real economy. A calibrated version of the model is shown to provide an intelligible account of several recurrent economic phenomena and it can be a privileged ground for policy analysis. The authors' investigation provides a relevant methodological contribution to the field of banking research and sheds new light into the role of banks and their prudential regulation. Specifically, the results suggest that banks are key economic agents. Through their financial intermediation activity, credit institutions facilitate investment and promote growth.
    Keywords: agent-based computational model,financial intermediation,prudential policy,bank regulation
    JEL: C63 G28
    Date: 2016
  5. By: Lavarello, Pablo José; Sarabia, Marianela
    Abstract: Este trabajo analiza la política industrial en la Argentina durante la primera década del siglo XXI. Para ello, en primer lugar, realiza una revisión crítica de los aportes de la teoría económica a la interpretación de la política industrial, contrastando el enfoque estándar, asociado a la idea de un Estado “facilitador” que aplica políticas horizontales (o de competitividad) y resuelve fallas de mercado, con el enfoque cepalino, asociado a la llamada “síntesis estructuralista-evolucionista-schumpeteriana”, que informa una acción estatal más selectiva (o vertical), y apunta a la diversificación productiva como mecanismo para la generación de nuevas capacidades tecnológicas. En el marco de este segundo enfoque se define a la política industrial como un conjunto de acciones selectivas orientadas a ciertas actividades que, por su potencial de encadenamientos y rendimientos crecientes dinámicos, son pasibles de inducir el cambio estructural y aumentar la productividad de la economía.
    Date: 2015–12
  6. By: Hueth, Brent; Jang, Heesun
    Keywords: Industrial Organization, Productivity Analysis,
    Date: 2016–06–20
  7. By: Tiziano Squartini; Guido Caldarelli; Giulio Cimini
    Abstract: The spreading of financial distress in capital markets and the resulting systemic risk strongly depend on the detailed structure of financial interconnections. Yet, while financial institutions have to disclose their aggregated balance sheet data, the information on single positions is often unavailable due to privacy issues. The resulting challenge is that of using the aggregate information to statistically reconstruct financial networks and correctly predict their higher-order properties. However, standard approaches generate unrealistically dense networks, which severely underestimate systemic risk. Moreover, reconstruction techniques are generally cast for networks of bilateral exposures between financial institutions (such as the interbank market), whereas, the network of their investment portfolios (i.e., the stock market) has received much less attention. Here we develop an improved reconstruction method, based on statistical mechanics concepts and tailored for bipartite market networks. Technically, our approach consists in the preliminary estimation of connection probabilities by maximum-entropy inference driven by entities capitalizations and link density, followed by a density-corrected gravity model to assign position weights. Our method is successfully tested on NASDAQ, NYSE and AMEX filing data, by correctly reproducing the network topology and providing reliable estimates of systemic risk over the market.
    Date: 2016–06
  8. By: Alem, Yonas (Department of Economics, School of Business, Economics and Law, Göteborg University); Eggert, Håkan (Department of Economics, School of Business, Economics and Law, Göteborg University); Kocher, Martin G. (Department of Economics, School of Business, Economics and Law, Göteborg University); Ruhinduka, Remidius D. (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: Understanding unethical behavior is essential to many phenomena in the real world. We carry out a field experiment in a unique setting that varies the levels of reciprocity and guilt in an ethical decision. A survey more than one year before the field experiment allows us to compare at the individual level stated unethical behavior with revealed behavior in the same situation in the field. Our results indicate a strong discrepancy between stated and revealed behavior, regardless of the specific treatment in the field experiment. This suggests that, given a natural setting, people may actually behave inconsistently with the way in which they otherwise “brand” themselves. Our findings raise caution about the interpretation of stated behavioral measures commonly used in research on unethical behavior. However, we show that inducing reciprocity and guilt leads to a decrease in unethical behavior
    Keywords: Honesty; kindness; guilt; field experiment; behavioral economics
    JEL: C93 D01 D03
    Date: 2016–06
  9. By: Arim, Rodrigo
    Abstract: El vínculo entre distintas dimensiones del desempeño económico y las características de los procesos de formación de los salarios ha estado en debate académico desde la segunda posguerra del siglo XX en los ámbitos académicos y entre los hacedores de política. Sin embargo, la forma en que la negociación colectiva incide en los resultados macroeconómicos es un campo abierto de discusión en el ámbito académico. En el caso del Uruguay, una década de crecimiento económico sostenido ha permitido converger a tasas de desempleo cercanas a las que la literatura internacional reconoce como friccionales, aunque persisten diferencias importantes entre trabajadores de diversas edades, género y nivel educativo. La negociación colectiva, instrumentada con esquemas similares a los vigentes durante el último lustro de los ochenta y generalizada a nivel de todas las ramas de actividad, comenzó a ser operativa en momentos en que el país se recuperaba de la crisis económica del 2002, con niveles de actividad aún deprimidos; pero en un contexto donde los fundamentos macroeconómicos daban sustento a fuertes incrementos salariales que permitieran recuperar los niveles previos a la crisis. Aunque no existen estudios sistemáticos al respecto, es razonable pensar que los primeros convenios colectivos adelantaron ajustes salariales que el funcionamiento del mercado en ausencia de negociación hubiese procesado más lentamente. También existe evidencia parcial que señala un efecto positivo (reductor) sobre la desigualdad.
    Date: 2016–01
  10. By: Xing Yuqing (National Graduate Institute for Policy Studies)
    Abstract: This paper argues that global value chains (GVCs) have transformed bilateral trade relations into multilateral and value added approach is needed to accurately measure the contribution of trade to economic growth and bilateral trade balances. Under GVCs, the impact of exchange rates on bilateral trade balances have been weakened and technological innovations may not necessarily increase domestic employment. The challenges associated with the emergence of GVCs require an in-depth understanding of modern international trade, which in turn calls for new modes of thinking and new theories. For developing countries, focusing on specific segments of GVCs and upgrading industrial capacity along value chains could be an alternative path of industrialization.
    Date: 2016–06
  11. By: Mondesire, Alicia
    Abstract: The Caribbean sub-regional synthesis report, covering 12 countries, assesses progress towards the gender equality goals articulated in the 1995 World Conference on Women, which produced the Beijing Platform for Action (BPfA). The process leading to the preparation of the report has involved a series of national, regional and global consultations that will culminate in the Beijing + 20 Review. The process has also led to the formulation of the Caribbean Joint Statement on Gender Equality and the Post-2015, as well as the SIDS Agenda, both of which express Caribbean perspectives and expectations regarding gender equality.
    Date: 2015–10
  12. By: Matteo Richiardi (Institute for New Economic Thinking at the Oxford Martin School Nuffield College, Oxford, UK); Ross E Richardson (Institute for New Economic Thinking at the Oxford Martin School Nuffield College, Oxford, UK)
    Abstract: We introduce JAS-mine, a new Java-based computational platform that features tools to support the development of large-scale, data-driven, discrete-event simulations. JAS-mine is specifically designed for both agent-based and microsimulation modelling, anticipating a convergence between the two approaches. An embedded relational database management system provides tools for sophisticated input-output communications and data storage, allowing the power of relational databases to be used within an object-oriented framework. The JAS-mine philosophy encourages the separation of distinct concepts, objects and functionalities of the simulation model, and advocates and supports transparency, flexibility and modularity in model design. For instance, JAS-mine allows to store the list of regressors and the estimated coefficients externally to code, making it easy to change the specification of the regression models used in the simulation and achieving a complete parallelisation between the tasks of the econometricians and those of the programmers. Moreover, tools for uncertainty analysis and search over the parameter space are also built in.
    Keywords: Simulation platform, Microsimulation, Agent-based, Software, Open-source.
    Date: 2016–06–21
  13. By: Ozlem Celik (Middle East Technical University (METU), Department of Political Science and Public Administration); Aylin Topal (Middle East Technical University (METU), Department of Political Science and Public Administration); Galip Yalman (Middle East Technical University (METU), Department of Political Science and Public Administration)
    Abstract: This paper outlines a theorisation of the systems of provision approach (sop) and illustrates the relation between financialisation and housing by applying the sop framework in the case of Istanbul. The interest of different segments of capitalist interests in urban space has been gradually growing in Turkey, and in Istanbul particularly over the last decade, with a special emphasis on the construction sector in general and housing, in particular. The housing provision in Istanbul has been changing in terms of the role of the state, the expansion and increase in construction sector in relation to the integration to global capitalism, moments of resistance in different neighbourhoods against gentrification, the expectations of consumers from different classes, and the changing role of labour. The paper shows that the role and impact of finance and financialisation is evident in the case of Istanbul in terms of revealing the tensions, conflicts and congruencies among different developers, different classes, between the state, developers and consumers.
    Date: 2016–04–30
  14. By: Cristelli, Matthieu; Tacchella, Andrea; Zaccaria, Andrea; Pietronero, Luciano
    Abstract: We present a comparative analysis of the medium-long term perspectives of development for sub-Saharan countries in the framework of economic complexity. This analysis is made in comparison with the development of Asian tigers. Economic complexity is a data-driven framework which aims at providing a more scientific basis for the economic theory and it has a specific focus on understanding the determinants of growth by means of two new economic dimensions: the country fitness and the product complexity. We argue that the fitness of countries is a quantitative assessment of those intangible assets, which drive the growth. The comparison of this measure for intangibles with monetary figures provides effective insights on the growth potential of countries and defines the fitness-income plane. The analysis of the dynamics in this plane reveals that most sub-Saharans get stuck in a pre-industrial regime which can be thought as a generalized poverty trap where both income and fitness dimensions are considered. Only Senegal, Kenya, Tanzania, Madagascar and Uganda show a behavior compatible with the early steps of a long term stable and sustained growth, which resembles the one of Vietnam and Malaysia at the beginning of the nineties. As expected, South Africa is the most mature economy of the southern part of Africa. However, its trajectory highlights the concrete risk of an incomplete development of its productive system in terms of diversification, which might concretely jeopardize South Africa’s chance to reach the level of wealth of fully developed countries and put the country at risk of getting stuck in the so-called middle-income trap.
    Keywords: economic complexity, economic traps, growth, fitness
    JEL: F4 O1 O4
    Date: 2014–11
  15. By: Bertolotti, María Isabel
    Abstract: La República Argentina suscribió diversos acuerdos internacionales que atañen a la actividad pesquera, creando ingentes demandas de conocimiento, asociadas a la sostenibilidad de los Recursos y del Ambiente Marino y a la incorporación del Enfoque Ecosistémico en la Pesca (EEP). El concepto de desarrollo sostenible expresa un proceso, que debe resultar simultáneamente sostenible en las diferentes dimensiones: social, económica, ambiental, cultural, institucional. La sostenibilidad y en especial el desarrollo sostenible se cuentan entre los conceptos más ambiguos y controvertidos de la literatura, por lo tanto es necesario abordar el análisis de la evaluación de la sostenibilidad, considerando las cuatro brechas limitantes para su aplicación práctica: la brecha conceptual, la brecha cognitiva, la brecha social y la brecha competitiva. Se tiende a cerrar la brecha conceptual entre economía y ecología, aceptando que el sistema socioeconómico y el sistema ambiental forman parte de un único sistema pesquero, a partir de un planteo positivo de la relación sociedad y ambiente, en el cual se consideran tanto las políticas públicas, como las expectativas sociales y los intereses económicos, en una gestión sostenible de los recursos pesqueros. Para cerrar la brecha cognitiva se deben garantizar los conocimientos necesarios para entender las interrelaciones del sistema pesquero, para ello se requiere no sólo de datos; sino de datos con relevancia, información estructurada con coherencia y sistemáticamente; con conocimiento científico, y también con conocimiento práctico de las comunidades involucradas; sin omitir que la disponibilidad de datos y sus costos, figuran entre los principales problemas de la selección de indicadores. En este contexto se inserta el debate sobre indicadores de sostenibilidad de las dimensiones, social y económica, los principios en que se sustentan y los objetivos perseguidos. Los principales aspectos a considerar en el ámbito del Enfoque Ecosistémico en la Pesca (EEP) según FAO (2010) son: "el contexto socioeconómico del sistema pesquero, incluido el empleo y los medios de vida, la situación económica de las pesquerías, el comercio y los mercados mundiales, los efectos distributivos y la equidad, la pobreza y la vulnerabilidad y las cuestiones de género".
    Keywords: Pesca Responsable; Desarrollo Sostenible; Indicadores;
    Date: 2016–05
  16. By: Beckert, Jens; Arndt, H. Lukas R.
    Abstract: Trotz der erheblichen Effekte der Vermögensvererbung für die Fortschreibung von sozialer Ungleichheit zwischen den Generationen spricht sich sowohl in Deutschland als auch in Österreich eine Mehrheit der Bevölkerung gegen die Erbschaftssteuer aus. In diesem Papier untersuchen wir, wie Gegner und Befürworter der Steuer ihre jeweilige Position begründen, und ergründen so die Strukturen des Diskurses zur Erbschaftssteuer. Datengrundlage sind die Online-Diskussionen, die zwei ausführliche Interviews zu dem Thema ausgelöst haben. Insgesamt wurden 3.573 Argumente inhaltsanalytisch codiert und ausgewertet.
    Abstract: Despite the significant impact of inheritance on perpetuating social inequality from one generation to the next, a majority of Germans and Austrians are opposed to an inheritance tax. In order to understand the structure of the discourse on this issue, we investigate how opponents and proponents of an inheritance tax justify their respective positions. The paper draws on our content analysis of 3,573 arguments expressed in online debates triggered by two in-depth public interviews on the topic.
    Date: 2016
  17. By: Hansjorg Herr (Berlin School of Economics and Law)
    Abstract: The finance dominated type of capitalism that has developed from the late 1970s and early 1980s on finds its nucleus in the deregulation of the national and international financial system and the switch to a shareholder oriented corporate governance system. Other aspects such as labour market deregulations (including policies to weaken trade unions), the aim of completely free trade around the globe, increasing freedom and power of multinational companies, and privatisation of formerly state functions also belong to the new regime. This finance dominated economic regime seems to be exhausted. The reforms implemented after the subprime crisis and the Great Recession are not sufficient to overcome the deeply rooted problems of the existing system. Reforms to the financial system did not substantially affect the functioning of the shadow banking system and the basic structures of the financial system were not changed. Both, the international financial system as well as the shareholder oriented corporate governance system were largely spared from reforms. Further labour market deregulations are still on the agenda of governments and international institutions. Policies to change income and wealth distribution are not on the political agenda. What is needed is a comprehensive reform agenda which searches for a new relationship between institutions, government policies, and markets.
    Keywords: financialisation, financial market regulation, demand management, income distribution
    JEL: E12 E44 F33 G28 P10
    Date: 2016–02–20
  18. By: Carlo Vercellone (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Souvent revendiquée par la gauche radicale, la « défense des services publics » dépasse rarement le niveau d’une lutte défensive. Pour Carlo Vercellone [3], les institutions du welfare sont pourtant au coeur d’une contradiction qui oppose la logique rentière du capitalisme cognitif à la dynamique de l’économie fondée sur la connaissance et la satisfaction des besoins sociaux. Ces institutions présentent à ce titre un potentiel de transformation sociale globale dont le revenu social garanti, inconditionnel et indépendant de l’emploi, pourrait représenter un moment clé.
    Keywords: welfare-state, commun, capitalisme cognitif, économie fondée sur la connaissance
    Date: 2016–05–23
  19. By: Abdullah Almaatouq
    Abstract: Labor market institutions are central for modern economies, and their polices can directly affect unemployment rates and economic growth. At the individual level, unemployment often has a detrimental impact on people's well-being and health. At the national level, high employment is one of the central goals of any economic policy, due to its close association with national prosperity. The main goal of this thesis is to highlight the need for frameworks that take into account the complex structure of labor market interactions. In particular, we explore the benefits of leveraging tools from computational social science, network science, and data-driven theories to measure the flow of opportunities and information in the context of the labor market. First, we investigate our key hypothesis, which is that opportunity/information flow through weak ties, and this is a key determinant of the length of unemployment. We then extend the idea of opportunity/information flow to clusters of other economic activities, where we expect the flow within clusters of related activities to be higher than within isolated activities. This captures the intuition that within related activities there are more "capitals" involved and that such activities require similar "capabilities." Therefore, more extensive clusters of economic activities should generate greater growth through exploiting the greater flow of opportunities and information. We quantify the opportunity/information flow using a complexity measure of two economic activities (i.e. jobs and exports).
    Date: 2016–06
  20. By: Alessio Emanuele Biondo; Alessandro Pluchino; Andrea Rapisarda
    Abstract: We introduce a new Self-Organized Criticality (SOC) model for simulating price evolution in an artificial financial market, based on a multilayer network of traders. The model also implements, in a quite realistic way with respect to previous studies, the order book dy- namics, by considering two assets with variable fundamental prices. Fat tails in the probability distributions of normalized returns are observed, together with other features of real financial markets.
    Date: 2016–06
  21. By: Antonio Camargo Díaz
    Abstract: Este artículo analiza la relación entre instituciones y cultura con el objeto de caracterizar las dificultades que entraña la separación conceptual de estos términos. Las definiciones propuestas por los economistas para abordar las instituciones se solapan con las propuestas antropológicas sobre la cultura, y omitir este hecho, como suelen hacer los economistas, supone erigir el análisis institucional sobre un objeto difuso. Para fortalecer los estudios institucionales se aduce que los economistas deben asumir una postura frente a los aportes de disciplinas como la sociología y la antropología a propósito de la cultura, pues el utillaje conceptual para abordar este objeto resulta insuficiente desde el ámbito disciplinar de la economía. Analizar la relación entre instituciones formales e informales con la cultura puede arrojar luces sobre el vínculo entre cultura e instituciones, y dónde puede buscarse la frontera de los dos conceptos.
    Keywords: Instituciones, cultura.
    JEL: B5 O10 Y80
    Date: 2015–12–04
  22. By: Mattia Guerini (Scuola Superiore Sant'Anna); Mauro Napoletano (OFCE and SKEMA Business School); Andrea Roventini (Scuola Superiore Sant'Anna - OFCE Sciences Po)
    Abstract: We develop an agent-based model in which heterogeneous firms and households interact in labor and good markets according to centralized or decentralized search and matching protocols. As the model has a deterministic backbone and a full-employment equilibrium, it can be directly compared to Dynamic Stochastic General Equilibrium (DSGE) models. We study the effects of negative productivity shocks by way of impulse-response func- tions (IRF). Simulation results show that when search and matching are centralized, the economy is always able to return to the full employment equilibrium and IRFs are similar to those generated by DSGE models. However, when search and matching are local, co- ordination failures emerge and the economy persistently deviates from full employment. Moreover, agents display persistent heterogeneity. Our results suggest that macroeco- nomic models should explicitly account for agents’ heterogeneity and direct interactions.
    Keywords: Agent-based model, Local interaction, Heterogeneous agents, DGSE Model
    JEL: E03 E32 E37
    Date: 2016–06

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