cycles have been traditionally the main subject of macroeconomics
but they need now to be explained in a new micro-meso-macro approach
of reciprocal feedback.
Regular and erratic patterns turn
out to be, thus, the result of co-evolution in variables and agents'
- the lower turn-around point in the business cycle
- upper turning point in the business cycle
Essay: Our Plan
B for macro-economic recovery and structural change (31st October
EWI has been asked to sign this program to change
the macro-economic policies to cope with the combined financial,
economic, social and environmental crisis in UK and other countries.
accepted to sign and would like to offer to our readers' reflection
full text of Plan B - A good economy for a good society.
leading economists have done the same.
The short- and long-run effects of fiscal austerity policies are
analysed in a model populated by heterogeneous, boundedly-rational
firms and banks. The model is able to account for a wide array of
macro and micro empirical regularities. In particular, it endogenously
generates self-sustained growth patterns together with persistent
economic fluctuations punctuated by deep downturns. On the policy
side, we find that austerity policies considerably harm the economy,
by increasing output volatility,
unemployment, and the incidence
of crises. In addition, they depress innovation
and the diffusion of new technologies, thus reducing long-run productivity
and GDP growth. Finally, the model show that discipline-guided
fiscal rules are self-defeating, as they do not stabilize public
finances, but, on the contrary, they disrupt them.
On the identification of the middle
class (Sept. 2011)
Income polarization should leave room to a much
stronger and wider middle class. But what is "middle class"
nowadays? This paper explores theoretical and practical definitions
that can be the sound base for new policies.
Authors' homepage: Prof.
Sir Anthony Atkinson and Andrea
Animal spirits, lumpy investment and
endogenous business cycles
Going well beyond Real Business Cycle or New-Keynesian
perspectives, this evolutionary model with fully micro-founded heterogeneous
bounded-rational agents is able to generate self-sustaining patterns
of long-term growth and endogenous business cycles.
The model can replicate the most important stylized
facts concerning micro- and macro-economic dynamics, e.g. that investment
is more volatile than GDP; consumption
is less volatile than GDP; investment, consumption and change in
stocks are procyclical and coincident variables; employment
is procyclical; un-employment
rate is anticyclical; firm size distributions are skewed but depart
from log-normality; firm growth distributions are tent-shaped.
It doesn't rely on rational expectations nor
on one fictious representative agent.
Agent-Based Keynesian Macroeconomics: An Evolutionary
Model Embedded in an Agent-Based Computer Simulation (2008)
distribution, credit and fiscal policies in an agent-based Keynesian
crisis without end: The consequences of
neoliberalism run amok (March 2013)
Instead of fostering innovation,
productivity and raising wages
to sustain consumption, Europe undermined
the income and demand generation process via wage stagnation and
widened income inequality. The stimulus from German re-unification
and the low interest rate convergence
produced by creation of the euro prompted a ten year credit
and asset price bubble that created fictitious prosperity. Postponing
stagnation in this fashion has had costs because it worsened the
ultimate stagnation by creating large build-ups of debt, which frame
austerity as never ending self-propelling dynamics.
Long-term macroeconomic data for 136 countries
and 42 years
The most user-friendly distribution of the main
international database on GDP components (consumption, investment,
public expenditure and net exports) for 136 countries and 42 years.
Excellent for international comparisons, long-term growth enquiries
and business cycle analysis, since it provides real values at constant
prices comparable over time and countries.
MS Excel MS
Industry-level output, employment, costs,
investment, capital stocks over 38 years
An excellent dataset for studying the evolution
of hundreds of industries.
MS Excel [4 MB]
US data for all the variables in IS-LM model
Comprehensive of 54 variables in long-term annual
and quarterly time-series, this US dataset is excellent for students
to test the model as well as for researchers to develop original
MS Excel [104
EU data for all the variables in IS-LM model
(Germany, France, Italy, Spain, UK, Switzerland and other 13 European
MS Excel [550
Oil world prices (1861-1999)
A very long time-series of a crucial price for
the world economy. Gain new insights in inflation
tides and business cycles.
MS Excel [7 KB]
Inflation expectations: an empirical assessment
In this study, the presence of a marked degree
of heterogeneity in the process of expectation formation is demostrated,
using a large longitudinal survey: the Survey of Consumer Attitudes
and Behavior, conducted by the Survey Research Center (SRC) at the
University of Michigan, available at a monthly frequency from 1978.
The financial crisis, austerity and the perspective of failure
The turmoil in the Eurozone is due to the global
crisis of financialisation that broke out in 2007. But it is also
due to the biased nature of the European Monetary Union (EMU). Systematic
pressure on labour has intensified the disparities of competitiveness
among Eurozone members, splitting the Eurozone into core
and periphery. The competitiveness of the core has benefited
from extraordinary pressure on workers' wages
which, in Germany, has meant practically stagnant real wages for
well over a decade. Loss of competitiveness has entailed systematic
current account deficits
for the periphery, mirrored by equally systematic surpluses for
Germany. The eruption of generalised instability in late 2009 reflects
these profound imbalances within the Eurozone.
Rescuing the banks has come at the cost of austerity,
with negative implications for European economies and societies.
Austerity will compress public expenditure
and weaken private consumption, i.e.
the elements of aggregate demand that have shown some vitality during
the recession of 2008-9. Given the collapse of investment and the
retreat of credit, austerity has increased the risk of recession.
After the Washington consensus: domestic
pulled GDP growth can be more reliable and equitable than export-led
The point of view of a trade unionist.
role of technology, organization and demand in growth and income
Crash - why it
happened and what to do about it
instant full-fledged book by heterodox economists, including Frédéric
Lordon, Dean Baker, James K. Galbraith,Paul Davidson, George Soros
about the financial and the housing bubble and crisis and ways out.
from Post-Autistic Economics Network
Innovation and Growth: A Schumpeterian model
creation of a positive feedback
loop is what makes the difference between sustained growth
and gradual (or sudden) decline. A Positive Feedback Loop
Innovation System (POLIS) is here modelled along Schumpeterian lines
and applied to the actual economy of Taiwan.
Who saw the financial crisis and who
This paper highlights several economist's forecast
of a crisis, while more standard models failed to see it in advance.
A new approach to business fluctuations: heterogeneous
interacting agents, scaling laws and financial fragility
Business fluctuations in
GDP, investment, etc. can be explained in a new way. The authors
present a simple agent-based model, whose core is the interaction
of heterogeneous financially fragile firms and a banking sector.
In their framework, the origin of business fluctuations can be
traced back to the ever changing configuration of the network of
heterogeneous interacting firms.
Simulations of the model
replicate surprisingly well an impressive set of stylized facts,
particularly two well known universal laws.
Essay [300 KB]
Cognitive macroeconometrics paradoxes
Using data from the Business Surveys Unit of
the European Commission as a long-running-continental-scale experiment,
this paper examines how, and how accurately, people assess economic
systems. Data show that people know the past better than the future
and that there is a systematic bias in forecasts.
A model of primary and secondary waves
in investment cycles
The large degree of independence of regional
and sectoral economic variables with respect to their macroeconomic
aggregates suggests that macroeconomic fluctuations are a consequence
of microeconomic disturbances, rather than the reverse.
Uniting Schumpeter's concern for innovation with
Keynes' concern for uncertainty and expectations formation, this
article focuses on the behaviour of entrepreneurs confronting uncertainty
caused by innovation. Entrepreneurs' behaviour is reconstructed
by modelling the functioning of their cognitive processes when innovations
appear. Recognition of the possibilities opened up by a successful
innovation generates a state of optimism in the minds of single
entrepreneurs, which eventually propagates to the whole economy
triggering an investments upswing. Likewise, unsuccessful innovations
can trigger a downswing.
Business cycles with firm-specific fixed
costs and variable costs: a model
Business cycles with firm-specific fixed
costs and variable costs: the Thai experience during the currency
|The debate on a macroeconomic
stimulus: a few contributions
Testimony of Mark Zandi Chief Economist and Cofounder Moodys
Economy.com before the U.S. Senate Budget Committee - November 19,
fiscal polity in a liquidity trap by Paul Krugman - Dec. 29, 2008
Obama Gap by Paul Krugman - January 8, 2009
Christina Romer ex-post analysis (September