2018/24 | LEM Working Paper Series | ||||||||||||||||
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The labour-augmented K+S model: a laboratory for the analysis of institutional and policy regimes |
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Giovanni Dosi, Marcelo C. Pereira, Andrea Roventini and Maria Enrica Virgillito |
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Keywords | |||||||||||||||||
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Labour market, Policy evaluation, Agent-based model
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JEL Classifications | |||||||||||||||||
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C63, E24, H53, J88
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Abstract | |||||||||||||||||
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In this work we discuss the research findings from the
labour-augmented Schumpeter meeting Keynes (K+S) agent-based
model. It comprises comparative dynamics experiments on an artificial
economy populated by heterogeneous, interacting agents, as workers,
firms, banks and the government. The exercises are characterised by
different degrees of labour flexibility, or by institutional shocks
entailing labour market structural reforms, wherein the phenomenon of
hysteresis is endogenous and pervasive. The K+S model constitutes a
laboratory to evaluate the effects of new institutional arrangements
as active/passive labour market policies, and fiscal austerity. In
this perspective, the model allows mimicking many of the customary
policy responses which the European Union and many Latin American
countries have embraced in reaction to the recent economic
crises. The obtained results seem to indicate, however, that most of
the proposed policies are likely inadequate to tackle the short-term
crises consequences, and even risk demoting the long-run economic
prospects. More objectively, the conclusions offer a possible
explanation to the negative path traversed by economies like Brazil,
where many of the mentioned policies were applied in a short period,
and hint about some risks ahead.
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