Growing Inequality, Financial Fragility, and Macroeconomic Dynamics: An Agent Based Model

Part of the Advances in Intelligent Systems and Computing book series (AISC, volume 229)

Abstract

Our aim is to analyse the interplay between growing inequality and financial fragility in a complex macroeconomic system. In order to do this, we propose a macroeconomic microfounded framework with heterogeneous agents in which households, firms, and banks interact according to decentralised matching processes. The main result is that growing inequality leads to more macroeconomic volatility, increasing the likelihood of observing large unemployment crises.

Keywords

agent-based macroeconomics business cycle crisis consumption inequality 

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Copyright information

© Springer-Verlag Berlin Heidelberg 2014

Authors and Affiliations

  1. 1.Università Politecnica delle MarcheAnconaItaly
  2. 2.Università “La Sapienza”RomaItaly

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