Journal of Evolutionary Economics

, Volume 26, Issue 1, pp 25–47 | Cite as

Increasing inequality, consumer credit and financial fragility in an agent based macroeconomic model

Regular Article

Abstract

We investigate the interplay between increasing inequality and consumer credit in a complex macroeconomic system with financially fragile heterogeneous households, firms and banks. Simulation results show that there are pros and cons of introducing consumer credit: on the one hand, for a certain time, it leads to lower unemployment through boosting aggregate demand; on the other hand, it accelerates the system tendency to the crisis. Since the increase of financial profits goes with a decline of households’ real wealth, a policy trade-off emerges.

Keywords

Consumer credit Inequality Agent-based macroeconomics Business cycle Profit rate Crisis Unemployment 

JEL Classification

C63 D31 E21 E32 

Supplementary material

191_2015_410_MOESM1_ESM.tex (72 kb)
(TEX 71.6 KB)

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Copyright information

© Springer-Verlag Berlin Heidelberg 2015

Authors and Affiliations

  1. 1.Department of Economics and Social SciencesUniversità Politecnica delle MarcheAnconaItaly
  2. 2.Sapienza Università di RomaRomaItaly

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