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Who we are



Business 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' behaviours.


Key concept: Economic recovery

Key concept: Economic expansion

Key concept: Trough - the lower turn-around point in the business cycle

Key concept: Economic boom

Key concept: Peak - upper turning point in the business cycle

Essay: A graph representation of a basic macroeconomic scheme: the IS-LM model

Students of the first year of economics usually learn the basic functioning of the economy thanks to the IS-LM model. Here we present an original graph representation that concentrates the entire model in just one sheet. It is an interactive page with all variables and links explained by a connected text.

The researcher will find many innovative features to the model. To a creative economist, this representation offers the immediate possibility of adding further variables and outlining new or different linkages between variables.


If you have never heard of IS-LM model, click here. If you want to introduce changes in the model, use this. The qualitative discussion of the model is assuming a flexible chronometric time as envisaged here (2019).

Agent-Based Keynesian Macroeconomics: An Evolutionary Model Embedded in an Agent-Based Computer Simulation (2008)

The book

Essay: Our Plan B for macro-economic recovery and structural change

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. We accepted to sign and would like to offer to our readers' reflection the full text of Plan B - A good economy for a good society.

100 leading economists have done the same (31st October 2011).


Essay: Austerity impact (2014)

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.



Key concept: Economic recession (2015)

Key concept: Economic depression


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 Brandolini

Original publisher


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.


Essay: Income distribution, credit and fiscal policies in an agent-based Keynesian model (2012)

Essay:Europe’s 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.


Key concepts

Gross Domestic Product






Public expenditure
















Economic expansion





Key data

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 Access

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 reflections.

MS Excel [104 KB]


EU data for all the variables in IS-LM model (Germany, France, Italy, Spain, UK, Switzerland and other 13 European countries)

MS Excel [550 KB]


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.


Essay: The financial crisis, austerity and the perspective of failure (September 2010)

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.


General site

After the Washington consensus: domestic pulled GDP growth can be more reliable and equitable than export-led growth

The point of view of a trade unionist.


The role of technology, organization and demand in growth and income distribution


Book: Crash - why it happened and what to do about it

An 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.

PDF from Post-Autistic Economics Network


Innovation and Growth: A Schumpeterian model of innovation

The 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 did not

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 crisis


Author's homepage


The debate on a macroeconomic stimulus: a few contributions

Written Testimony of Mark Zandi Chief Economist and Cofounder Moody’s before the U.S. Senate Budget Committee - November 19, 2008

Optimal fiscal polity in a liquidity trap by Paul Krugman - Dec. 29, 2008

The Obama Gap by Paul Krugman - January 8, 2009

Christina Romer ex-post analysis (September 2010)




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