Coauthor
  • NAPOLETANO Mauro (37)
  • DOSI Giovanni (22)
  • FAGIOLO Giorgio (11)
  • LAMPERTI Francesco (10)
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  • Working paper (29)
  • Article (16)
  • Part or chapter of a book (2)
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Publication date 2021 Collection Sciences Po OFCE Working Paper : 14/2021
DOSI Giovanni
LAMPERTI Francesco
MAZZUCATO Mariana
4
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We study the impact of alternative innovation policies on the short- and long-run performance of the economy, as well as on public finances, extending the Schumpeter meeting Keynes agent-based model (Dosi et al., 2010). In particular, we consider market-based innovation policies such as R&D subsidies to firms, tax discount on investment, and direct policies akin to the “Entrepreneurial State” (Mazzucato, 2013), involving the creation of public research oriented firms diffusing technologies along specific trajectories, and funding a Public Research Lab conducting basic research to achieve radical innovations that enlarge the technological opportunities of the economy. Simu- lation results show that all policies improve productivity and GDP growth, but the best outcomes are achieved by active discretionary State policies, which are also able to crowd-in private investment and have positive hysteresis effects on growth dynamics. For the same size of public resources allocated to market-based interventions, “Mission” innovation policies deliver significantly better aggregate performance if the government is patient enough and willing to bear the intrinsic risks related to innovative activities.

Publication date 2020-05-06 Collection OFCE working paper : 18/2020
DOSI Giovanni
RUSSO Emmanuele
2
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In this paper, we study the effects of industrial policies on international convergence using a multi-country agent-based model which builds upon Dosi et al. (2019b). The model features a group of microfounded economies, with evolving industries, populated by heterogeneous firms that compete in international markets. In each country, technological change is driven by firms’ activities of search and innovation, while aggregate demand formation and distribution follows Keynesian dynamics. Interactions among countries take place via trade flows and international technological imitation. We employ the model to assess the different strategies that laggard countries can adopt to catch up with leaders: market-friendly policies;industrial policies targeting the development of firms’ capabilities and R&D investments, as well as trade restrictions for infant industry protection; protectionist policies focusing on tariffs only. We find that markets cannot do the magic: in absence of government interventions, laggards will continue to fall behind. On the contrary, industrial policies can successfully drive international convergence among leaders and laggards, while protectionism alone is not necessary to support catching up and countries get stuck in a sort of middle-income trap. Finally, in a global trade war, where developed economies impose retaliatory tariffs, both laggards and leaders are worse off and world productivity growth slows down.

We develop a macroeconomic agent-based model to study how financial instability can emerge from the co-evolution of interbank and credit markets and the policy responses to mitigate its impact on the real economy. The model is populated by heterogenous firms, consumers, and banks that locally interact in dfferent markets. In particular, banks provide credit to firms according to a Basel II or III macro-prudential frameworks and manage their liquidity in the interbank market. The Central Bank performs monetary policy according to dfferent types of Taylor rules. We find that the model endogenously generates market freezes in the interbank market which interact with the financial accelerator possibly leading to firm bankruptcies, banking crises and the emergence of deep downturns. This requires the timely intervention of the Central Bank as a liquidity lender of last resort. Moreover, we find that the joint adoption of a three mandate Taylor rule tackling credit growth and the Basel III macro-prudential frame-work is the best policy mix to stabilize financial and real economic dynamics. However, as the Liquidity Coverage Ratio spurs financial instability by increasing the pro-cyclicality of banks’ liquid reserves, a new counter-cyclical liquidity buffer should be added to Basel III to improve its performance further. Finally, we find that the Central Bank can also dampen financial in- stability by employing a new unconventional monetarypolicy tool involving active management of the interest-rate corridor in the interbank market.

in Regional Environmental Change Publication date 2019-03
LAMPERTI Francesco
MANDEL Antoine
SAPIO Alessandro
BALINT Tomas
KHORENZHENKO Igor
4
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Understanding the complex, dynamic, and non-linear relationships between human activities, the environment and the evolution of the climate is pivotal for policy design and requires appropriate tools. Despite the existence of different attempts to link the economy (or parts of it) to the evolution of the climate, results have often been disappointing and criticized. In this paper, we discuss the use of agent-based modeling for climate policy integrated assessment. First, we identify the main limitations of current mainstream models and stress how framing the problem from a complex system perspective might help, in particular when extreme climate conditions are at stake and general equilibrium effects are questionable. Second, we present two agent-based models that serve as prototypes for the analysis of coupled climate, energy, and macroeconomic dynamics. We argue that such models constitute examples of a promising approach for the integrated assessment of climate change and economic dynamics. They allow a bottom-up representation of climate damages and their cross-sectoral percolation, naturally embed distributional issues, and traditionally account for the role of finance in sustaining economic development and shaping the dynamics of energy transitions. All these issues are at the fore-front of the research in integrated assessment. Finally, we provide a careful discussion of testable policy exercises, modeling limitations, and open challenges for this stream of research. Notwithstanding great potential, there is a long way-to-go for agent-based models to catch-up with the richness of many existing integrated assessment models and overcome their major problems. This should encourage research in the area.

In this work we study the granular origins of business cycles and their possible underlying drivers. As shown by Gabaix (Econometrica 79:733–772, 2011), the skewed nature of firm size distributions implies that idiosyncratic (and independent) firm-level shocks may account for a significant portion of aggregate volatility. Yet, we question the original view grounded on “supply granularity”, as proxied by productivity growth shocks – in line with the Real Business Cycle framework–, and we provide empirical evidence of a “demand granularity”, based on investment growth shocks instead. The role of demand in explaining aggregate fluctuations is further corroborated by means of a macroeconomic Agent-Based Model of the “Schumpeter meeting Keynes” family Dosi et al. (J Econ Dyn Control 52:166–189, 2015). Indeed, the investigation of the possible microfoundation of RBC has led us to the identification of a sort of microfounded Keynesian multiplier.

The paper compares the effects of market-based (M-B) and command-and-control (C&C) climate policies on the direction of technical change and the prevention of environmental disasters. Drawing on a model of endogenous growth and directed technical change, we show that M-B policies (carbon taxes and subsidies toward clean sectors) suffer from path dependence and exhibit bounded window of opportunities: delays in their implementation make them ineffective both in redirecting technical change, (i.e. triggering a transition toward clean energy) and in avoiding environmental catastrophes. On the contrary, we find that C&C interventions are favored by path dependence and guarantee policy effectiveness irrespectively of the timing of their introduction. As the hypothesis of path dependence in technological change has received vast empirical support and it is a key feature of many models of growth, we argue that C&C policies should be seen as a valuable and non-equivalent alternative to M-B interventions.

Publication date 2018-09 Collection Working paper de l'OFCE : 27
DOSI Giovanni
PEREIRA Marcelo
VIRGILLITO Maria Enrica
1
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In this work we discuss the research findings from the labour-augmented Schumpeter meeting Keynes (K+S) agent-based model. It comprises comparative dynamics experiments on an artificial economy populated by heterogeneous, interacting agents, as workers, firms, banks and the government. The exercises are characterised by different degrees of labour flexibility, or by institutional shocks entailing labour market structural reforms, wherein the phenomenon of hysteresis is endogenous and pervasive. The K+S model constitutes a laboratory to evaluate the effects of new institutional arrangements as active/passive labour market policies, and fiscal austerity. In this perspective, the model allows mimicking many of the customary policy responses which the European Union and many Latin American countries have embraced in reaction to the recent economic crises. The obtained results seem to indicate, however, that most of the proposed policies are likely inadequate to tackle the short-term crises consequences, and even risk demoting the long-run economic prospects. More objectively, the conclusions offer a possible explanation to the negative path traversed by economies like Brazil, where many of the mentioned policies were applied in a short period, and hint about some risks ahead.

Publication date 2018-09 Collection Working paper de l'OFCE : 28
LAMPERTI Francesco
DOSI Giovanni
SAPIO Alessandro
9
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9
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In this work, we employ an agent-based integrated assessment model to study the likelihood of transition to green, sustainable growth in presence of climate damages. The model comprises heterogeneous fossil-fuel and renewable plants, capital- and consumption-good firms and a climate box linking greenhouse gasses emission to temperature dynamics and microeconomic climate shocks affecting labour productivity and energy demand of firms. Simulation results show that the economy possesses two statistical equilibria: a carbon-intensive lock-in and a sustainable growth path characterized by better macroeconomic performances. Once climate damages are accounted for, the likelihood of a green transition depends on the damage function employed. In particular, aggregate and quadratic damage functions overlook the impact of climate change on the transition to sustainability; to the contrary, more realistic micro-level damages are found to deeply influence the chances of a transition. Finally, we run a series of policy experiments on carbon (fossil fuel) taxes and green subsidies. We find that the effectiveness of such marketbased instruments depends on the different channels climate change affects the economy through, and complementary policies might be required to avoid carbon-intensive lock-ins.

In this work we study the granular origins of business cycles and their possible underlying drivers. As shown by Gabaix (2011), the skewed nature of firm size distributions implies that idiosyncratic (and independent) firm-level shocks may account for a significant portion of aggregate volatility. Yet, we question the original view grounded on “supply granularity”, as proxied by productivity growth shocks – in line with the Real Business Cycle framework–, and we provide empirical evidence of a “demand granularity”, based on investment growth shocks instead. The role of demand in explaining aggregate fluctuations is further corroborated by means of a macroeconomic Agent-Based Model of the “Schumpeter meeting Keynes” family (Dosi et al., 2015). Indeed, the investigation of the possible microfoundation of RBC has led us to the identification of a sort of microfounded Keynesian multiplier.

in Macroeconomic Dynamics Publication date 2018-08
GUERINI Mattia
MONETA Alessio
2
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0
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In this paper, we investigate the causal effects of public and private debts on US output dynamics. We estimate a battery of Cointegrated Structural Vector Autoregressive models, and we identify structural shocks by employing Independent Component Analysis, a data-driven technique which avoids ad-hoc identification choices. The econometric results suggest that the impact of debt on economic activity is Janus-faced. Public debt shocks have positive and persistent influence on economic activity. In contrast, rising private debt has a milder positive impact on gross domestic product, but it fades out over time. The analysis of the possible transmission mechanisms reveals that public debt crowds in private consumption and investment. In contrast, mortgage debt fuels consumption and output in the short-run, but shrinks them in the medium-run.

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