Agent-based models for economic policy design: Two illustrative examples

Arbeitspapier

With the help of two examples, we illustrate the usefulness of agent-based models as a tool for economic policy design. In our first example, we apply a financial market model in which the order flow of speculators, relying on technical and fundamental analysis, generates intricate price dynamics. In our second example, we apply a Keynesian-type goods market model in which the investment behavior of firms, relying on extrapolative and regressive predictors, generates complex business cycles. We add a central authority to these two setups and explore the impact of simple intervention strategies on the model dynamics. Based on these experiments, we conclude that agent-based models may help us to understand how markets function and to evaluate the effectiveness of various stabilization policies.

Object Details

• ISBN: 978-3-943153-02-6
• Language: Englisch

References and Relationships

• Bibliographic citation: Series: BERG Working Paper Series ; No. 88

Classification and Topics

• Classification: Wirtschaft ; Computational Techniques; Simulation Modeling ; Expectations; Speculations ; Business Fluctuations; Cycles ; Asset Pricing; Trading Volume; Bond Interest Rates
• Subject: Agent-based models ; Economic policy design ; Financial markets ; Goods markets ; Simulation analysis

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Westerhoff, Frank ; Franke, Reiner
• Event: Veröffentlichung
• (who): Bamberg University, Bamberg Economic Research Group (BERG)
• (where): Bamberg
• (when): 2012

Further information

• Handle: http://hdl.handle.net/10419/66136
• Last update: 10.03.2025, 11:43 AM CET