Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/174533
Authors: 
Guerini, Mattia
Napoletano, Mauro
Roventini, Andrea
Year of Publication: 
2016
Series/Report no.: 
LEM Working Paper Series 2016/24
Abstract: 
We develop an agent-based model in which heterogeneous firms and households interact in labor and good markets according to centralized or decentralized search and matching protocols. As the model has a deterministic backbone and a full-employment equilibrium, it can be directly compared to Dynamic Stochastic General Equilibrium (DSGE) models. We study the effects of negative productivity shocks by way of impulse-response functions (IRF). Simulation results show that when search and matching are centralized, the economy is always able to return to the full employment equilibrium and IRFs are similar to those generated by DSGE models. However, when search and matching are local, coordination failures emerge and the economy persistently deviates from full employment. Moreover, agents display persistent heterogeneity. Our results suggest that macroeconomic models should explicitly account for agents' heterogeneity and direct interactions.
Subjects: 
Agent-Based Model
Local Interactions
Heterogeneous Agents
DSGE Model
JEL: 
E03
E32
E37
Document Type: 
Working Paper

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