2014/21 | LEM Working Paper Series | ||||||||||||||||
Micro and Macro Policies in Keynes+Schumpeter Evolutionary Models |
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Giovanni Dosi, Mauro Napoletano, Andrea Roventini, Tania Treibich |
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Keywords | |||||||||||||||||
agent-based model, fiscal policy, economic crises, austerity policies, disequilibrium dynamics
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JEL Classifications | |||||||||||||||||
C63, E32, E6, E52, G01, G21, O4
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Abstract | |||||||||||||||||
This paper presents the family of the Keynes+Schumpeter (K+S, cf. Dosi
et al, 2010, 2013, 2014) evolutionary agent-based models, which study
the effects of a rich ensemble of innovation, industrial dynamics and
macroeconomic policies on the long-term growth and short-run
fluctuations of the economy. The K+S models embed the Schumpeterian
growth paradigm into a complex system of imperfect coordination among
heterogeneous interacting firms and banks, where Keynesian
(demand-related) and Minskian (credit cycle) elements feed back into
the meso and macro dynamics. The model is able to endogenously
generate long-run growth together with business cycles and major
crises. Moreover, it reproduces a long list of macroeconomic and
microeconomic stylized facts. Here, we discuss a series of experiments
on the role of policies affecting i) innovation, ii) industry
dynamics, iii) demand and iv) income distribution. Our results suggest
the presence of strong complementarities between Schumpeterian
(technological) and Keynesian (demand-related) policies in ensuring
that the economic system follows a path of sustained stable growth and
employment.
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