The Economy as an Evolving Complex System IV, pp. xx–xx
DOI: 10.37911/9781947864665.02
12. Implications of Behavioral Rules in Agent-Based Macroeconomics
Author: Herbert Dawid, Bielefeld University; Domenico Delli Gatti, Università Cattolica del Sacro Cuore; Luca Eduardo Fierro, International Institute for Applied Systems Analysis; and Sebastian Poledna, International Institute for Applied Systems Analysis
Abstract
In this paper we examine the role of the design of behavioral rules in agent-based macroeconomic modeling. Based on clear theoretical foundations, we develop a general representation of the behavioral rules governing price and quantity decisions of firms and show how rules used in four main families of agent-based macroeconomic models can be interpreted as special cases of these general rules. We embed the four variations of these rules into a calibrated agent-based macroeconomic framework and show that they all yield qualitatively very similar dynamics in business-as-usual times. However, the impact of demand, cost, and productivity shocks differ substantially depending on which of the four variants of the price and quantity rules are used.
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