A Keynes-Kalecki Model of Cyclical Growth with Agent-Based Features

MICROECONOMICS, MACROECONOMICS AND ECONOMIC POLICY: ESSAYS IN HONOUR OF MALCOLM SAWYER, P. Arestis, ed., Palgrave, 2010

36 Pages Posted: 16 Sep 2010

See all articles by Mark Setterfield

Mark Setterfield

New School for Social Research

Andrew Budd

affiliation not provided to SSRN

Date Written: September 16, 2010

Abstract

Throughout his career, Malcolm Sawyer has both encouraged and contributed to the development of a Kaleckian alternative to conventional macroeconomic theory. In the spirit of this endeavour, we construct a Keynes-Kalecki model of cyclical growth with agent-based features. Our model is driven by heterogeneous firms who, confronting an environment of fundamental uncertainty, revise their “state of long run expectations” in response to recent events. Model simulations generate fluctuations in the rate of growth that are aperiodic and of variable amplitude. We also study the size distribution of firms resulting from our simulations, finding evidence of a power law distribution that we have no reason to anticipate from the basic structure of our model. Finally, we reflect on the potential advantages of combining aggregate structural modeling with some of the methods and practices of agent-based computational economics.

Keywords: Kaleckian Model, Growth, Cycles, Agent-Based Computational Economics

JEL Classification: E12, E32, E37, O41

Suggested Citation

Setterfield, Mark and Budd, Andrew, A Keynes-Kalecki Model of Cyclical Growth with Agent-Based Features (September 16, 2010). MICROECONOMICS, MACROECONOMICS AND ECONOMIC POLICY: ESSAYS IN HONOUR OF MALCOLM SAWYER, P. Arestis, ed., Palgrave, 2010, Available at SSRN: https://ssrn.com/abstract=1678006

Mark Setterfield (Contact Author)

New School for Social Research ( email )

6 East 16th Street
New York, NY 10003
United States

Andrew Budd

affiliation not provided to SSRN ( email )

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