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No Man is an Island: The Impact of Heterogeneity and Local Interactions on Macroeconomic Dynamics

 

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Type:   Working paper
 
Titre:   No Man is an Island: The Impact of Heterogeneity and Local Interactions on Macroeconomic Dynamics
 
Auteur(s):   Guerini, Mattia - Scuola Superiore Sant'Anna (Auteur)
Napoletano, Mauro (1977-...) - Observatoire français des conjonctures économiques (Auteur)
Roventini, Andrea - Laboratory of Economics and Management (LEM) (Auteur)
 
Date de publication:   2016-06
 
Éditeur:   Paris  :  OFCE
 
Collection:   Working paper de l'OFCE  :  2016-18
 
Mots-clés:   [en] Agent-based model, Local interactions, Heterogenous agents, DGSE Model
 
JEL:   E3,  E32,  E37
 
Résumé:   [en] 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
 
URL:   http://www.ofce.sciences-po.fr/pdf/dtravail/WP2016-18.pdf
 
 

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