Christophe Deissenberg

EURACE: A Massively Parallel Agent-Based Model of the European Economy ⋆

EURACE is a major European attempt to construct an agent-based model of the European economy with a very large population of autonomous, purposive agents interacting in a complicated economic environment. To create it, major advances are needed, in particular in terms of economic modeling and software engineering. In this paper, we describe the general structure of the economic model developed for EURACE and present the Flexible Large-scale Agent Modeling Environment (FLAME) that will be used to describe the agents and run the model on massively parallel supercomputers. Illustrative simulations with a simplified model based on EURACE’s labor market module are presented.

Production and Finance in EURACE

EURACE is a major FP6 STREP project aiming at constructing anexhaustive agent-based model of the European economy, populated by avery large number of sophisticated, autonomous agents. The EURACEmodel, which has an explicit spatial structure, includes all the majormarkets considered in quantitative macroeconomic modelling (consumergoods, investment goods, labour, credit and finance). It offers aunique opportunity for studying, from a new perspective, theempirically observed but theoretically poorly understood link betweenthe real and the financial sphere of a modern economy. After summarilypresenting the main features of EURACE, this paper describes in moredetail the newly developed financial management module thatintermediates between the real and the financial spheres in EURACE. Ina nutshell, this module defines the link between the hiring andinvestment behavior of the firms as a function of the revenues theyobtain by selling their products, of the money they can raise on thecredit and financial markets, of their dividend policy, and othermajor aspects of financial decision-making.

Cheating for the common good in a macroeconomic policy game

This paper presents a simple repeated-game model of interaction between an optimizing government and the private sector. Two polar cases are considered: (a) the private sector is represented by a single agent; and (b) there is a continuum of heterogenous atomistic private agents. In both cases, the government starts each repetition by making a non-binding announcement about its future actions. The players have complete and perfect information, with one exception: the private agents do not know whether or not the government will act as announced. Thus, each private agent ieither behaves with probability ði as if it trusted the announcement, or plays with probability 1 . ði as a Stackelberg leader. After observing the reaction of the private sector, the government

Energy Shocks and Macroeconomic Stabilization Policies in an Agent-Based Macro Model

In this chapter we consider the effects of exogenous energy shocks on an agent-based macroeconomic system and study the out-of-equilibrium dynamics. We introduce automatic stabilizers that allow the artificial economy to absorbe the shocks. Two types of macroeconomic stabilization policies are implemented: a consumer subsidy scheme that compensates households for their loss in purchasing power, and a tax reduction scheme that affects both households and firms to support consumption and investments. Policy experiments are then carried out to evaluate the effectiveness of these macroeconomic policies. Finally, we are able to distinguish between short- and long-term effects of the policy measures.

Money and exchange in an economy with spatially differentiated agents

The impact of money supply on the real variables and on utility is an important question in monetary economics. Most previous works study this impact in representative agent economies, often under perfect foresight. With such a framework, however, the use of fiat money as a medium of exchange cannot be endogenously explained. This paper, by contrast, considers an economy where fiat money is intrinsically necessary for exchange, due to the local structure of interaction among agents. It investigates the transitory and permanent impact of local or global injections of money on the dynamics of exchanged quantities, prices, and individual welfares, and the mechanisms that explain this evolution.

Real taxation and production in a monetary economy with spatially differentiated agents

The impact of money supply on real variables and on utility is an important question in monetary economics. Most previous work studies this impact in representative agent economies, often under perfect foresight. Within such a framework, however, the use of fiat money as a medium of exchange cannot be endogenously explained. This paper, by contrast, considers an economy where fiat money is intrinsically necessary for exchange, due to the local structure of interaction among agents. It investigates the transitory and permanent impact of local or global injections of money on the dynamics of produced quantities and exchanged quantities, prices, and individual welfare, and the mechanisms that explain this evolution. Furthermore, it examines the impact of real taxation on the above-mentioned variables.