The theory of precautionary saving is shown in this paper to be isomorphic to the Arrow-Pratt theory of risk aversion, making possible the application of a large body of knowledge about risk aversion to precautionary saving, and more generally, to the theory of optimal choice under risk In particular, a measure of the strength of precautionary saving motive analogous to the Arrow-Pratt measure of risk aversion is used to establish a number of new propositions about precautionary saving, and to give a new interpretation of the Oreze-Modigliani substitution effect

Precautionary Saving in the Small and in the Large

サイアート, マーチの「A Behavioral Theory of the Firm」

https://www.ineteconomics.org/uploads/papers/FiscalandMonetaryPoliciesinComplexEvolvingEconomies.pdf

Fiscal and monetary policies in complex evolving economies

Essays on the theory of economic growth

Agent based-stock flow consistent macroeconomics: Towards a benchmark model

We present a model of a dynamic and complex economy in which the creation and the destruction of money result from interactions between multiple and heterogeneous agents. In the baseline scenario, we observe the stabilization of the income distribution between wages and profits. We then alter the model by increasing the flexibility of wages. This change leads to the formation of a deflationary spiral. Aggregate activity decreases and the unemployment increases. The macroeconomic stability of the model is affected and eventually a systemic crisis arises. Finally, we show that the introduction of a minimum wage would have allowed the aggregate demand to be boosted and to avoid this crisis.

/pdf/flexibility-of-wages-and-macroeconomic-instability-in-an-8407lfe6nn.pdf

Flexibility of wages and macroeconomic instability in an agent-based computational model with endogenous money

Jamel (Java Agent-based Macro-Economic Laboratory) is an open source agent-based framework dedicated to the modeling, the simulation and the analysis of complex monetary economies. This version (20140206) contains the scenario used in the paper "Deleveraging crises and deep recessions: a behavioural approach" by Pascal Seppecher and Isabelle Salle.

Simulator and scenario for "Deleveraging crises and deep recessions: a behavioural approach"

Macroeconomic dynamics are characterized by alternating patterns of periods of relative stability and large swings. Standard micro-founded macro-economic models account for these patterns through exogenous and persistent shocks. In this paper, we develop a fully decentralized and micro-founded macro-economic agent-based model, augmented with an opinion model, which produces endogenous waves of pessimism and optimism that feed back into firms' leverage and households' precautionary saving behaviour. A major emergent property of our model is precisely the complex successions of stable and unstable macro-economic regimes. The model is further able to account for a wide spectrum of macro-and micro empirical regularities. Within this framework, we analyse a series of macro-economic phenomena of key relevance in the current macro-economic debate, especially the occurrence of deleveraging crises and Fisherian debt-deflation recessions. Our analysis suggests that the relative dynamics of prices and wages and the resulting income distribution along a deflation-ary path are critical determinants of the severity of the recession, and the chances of recovery.

https://www.santannapisa.it/sites/default/files/seminars_files/CeNDEF-WP-14_0.pdf

Deleveraging crises and deep recessions: a behavioural approach

This paper proposes to model market mechanisms as a collective learning process for firms in a complex adaptive system, namely Jamel, an agent-based, stock-flow consistent macroeconomic model. Inspired by Alchian's (1950) " blanketing shotgun process " idea, our learning model is an ever-adapting process that puts a significant weight on exploration vis-a-vis exploitation. We show that decentralized market selection allows firms to collectively adapt their overall debt strategies to the changes in the macroeconomic environment so that the system sustains itself, but at the cost of recurrent deep downturns. We conclude that, in complex evolving economies, market processes do not lead to the selection of optimal behaviors, as the characterization of successful behaviors itself constantly evolves as a result of the market conditions that these behaviors contribute to shape. Heterogeneity in behavior remains essential to adaptation in such an ever-changing environment. We come to an evolutionary characterization of a crisis, as the point where the evolution of the macroeconomic system becomes faster than the adaptation capabilities of the agents that populate it, and the so far selected performing behaviors suddenly cease to be, and become instead undesirable.

Is the market really a good teacher

This paper studies coordination between firms in a multi-sectoral macroeconomic model with endogenous business cycles. Firms are both in competition and interdependent, and set their prices with a markup over unit costs. Markups are heterogeneous and evolve under market pressure. We observe a systematic coordination within firms in each sector, and between each sector. The resulting pattern of relative prices are consistent with the labor theory of value. Those emerging features are robust to technology shocks.

Pascal Seppecher

Papers

Flexibility of wages and macroeconomic instability in an agent-based computational model with endogenous money

Simulator and scenario for "Deleveraging crises and deep recessions: a behavioural approach"

Deleveraging crises and deep recessions: a behavioural approach

Is the market really a good teacher

What drives markups? Evolutionary pricing in an agent-based stock-flow consistent macroeconomic model