Applied Macro-modelling: Fully Scalable models

Winter School on Agent Based and Stock Flow Consistent modelling.

Limerick, January 30th – February 7th

If you are a highly motivated student of economics at masters or Ph.D. level, or you are working with a research center or a public institution and want to spend one week studying, researching, discussing, and exchanging experiences in the nice atmosphere of an Irish University campus nurtured by international experts and fellow students from all around the world, our winter school offers you 7 working days of lectures, seminars, and labs on Stock-Flow Consistent and Agent Based approaches. For more information, see http://s120.ul.ie/drupal/winterSchool and Applied Macro-modelling – Call For Application.

Report of the Dijon Workshop

by Antoine Godin and Mauro Napoletano

A wide variety of approaches, methodologies and topics were presented during the first workshop, allowing for interesting discussions and exchanges. Clearly, the complementarities of the Stock-Flow Consistent and Agent-Based approaches emerged, even if some were skeptical at first. The influence of finance, fiscal austerity and the construction of the euro zone are at the heart of applied work from both approaches. Furthermore, the topics and issues addressed by papers from both methodologies are similar. On the methodology side, SFC and ABM practitioners share issues regarding estimation or the role of expectations.  On the first issue, the workshop has featured some presentations about methods that could be used to improve the matching between theory and data in both SFC and ABMs. An open issue there, and that could be developed in future workshop, is how far to go in the model calibration and estimation exercises. Indeed, both types of exercises impose strong restrictions on models (e.g. about the ergodicity of the dynamics) which could be limiting in terms of the ability of the model to catch salient features of the reality or that could be hard to detect into some models. Furthermore, the ABM literature has developed robustness checks and stability analysis that need to be further developed in SFC models. This highlights the interest of confronting the two approaches.

This workshop also showed us the importance of getting together and confronting our analysis and results. In particular, the workshop has highlighted the strong complementarities existing between ABM and SFC models. On one hand, SFC models have so far been developed as general aggregative models, i.e. as systems of stock-flow consistent equations describing the laws of motion of the economy at the aggregate level. On the other hand, ABMs provide explicit micro-foundations to macroeconomic relations that, in ABMs, are emergent properties of the disequilibrium interactions occurring among heterogeneous agents. However, the use of the stock-flow consistent approach in ABMs has so far been limited (few exceptions to this are represented by the models of Kinsella et al., 2012 and by Seppecher and Salle, 2012, Raberto et al. 2012). The use of the stock-flow consistent approach in ABMs could thus contribute to improve the rigor of the micro-foundations provided by these models. However, it could also help to micro-found many of the Keynesian dynamics emphasized by SFC models. This is important also because, as it was pointed out in the workshop, SFC models are particularly suitable to study the effects of imbalances at the aggregate level. However, by construction, they cannot study the factors underlying the emergence of those imbalances, such as for example the factors leading to bubble-and-burst dynamics in asset markets. Finally, we should mention the possibility of having some kind of mixed models where some sectors are agent based and others aggregated. Combining ABM and SFC allows thus to offer a wide variety of models with more or less complexity and different levels of aggregation, depending of the subject under scrutiny.

References

–       Stephen Kinsella & Matthias Greiff & Edward J Nell, 2011. “Income Distribution in a Stock-Flow Consistent Model with Education and Technological Change,” Eastern Economic Journal, Palgrave Macmillan, vol. 37(1), pages 134-149.

–       Raberto, Marco & Teglio, Andrea & Cincotti, Silvano, 2012. “Debt, deleveraging and business cycles: An agent-based perspective,” Economics – The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy, vol. 6(27), pages 1-49.

–       Seppecher, Pascal & Isabelle Salle, 2012. “A Two-Sector Agent-Based Model: Empirical Validation and Prospects” Unpublished.

SFC sessions – FMM conference

After a first very fruitful workshop in Dijon (Going Further … Together: www.antoinegodin.eu/dijon) and a second venue in Limerick (Building a Common Language: www.antoinegodin.eu/limerick), which we hope to be highly stimulating, we will conclude this series of workshops in Berlin, during the FMM conference.

Indeed, two sessions (8 papers) will be dedicated to SFC modeling. We wish to remain within the areas described in the original call for papers (see attachment) and thus encourage papers addressing the following topics:
•    The theory of employment and unemployment
•    Possibilities and limitations of monetary and fiscal policy
•    Labor market institutions, active labor market policies, and decent jobs
•    Industrial policy, productivity and outsourcing
•    Green jobs and limits to growth
•    Working time and employment in a stagnating economy

However, papers treating other subjects related to the call for papers of the first two workshops (empirics, micro foundations, policy recommendation) will also be considered. Please note that all papers will be forwarded to the conference organizers should they decide to include SFC models in other sessions. Furthermore, more than one paper per author may be proposed, either via this call for paper or via the conference call for paper (fmm@boeckler.de).

The deadline for paper proposals is 30 June 2013. Please send an abstract (one page) to godin.antoine@gmail.com. Decisions will be made in early August. Registration forms for the introductory lectures and the conference will be made available online in mid-August. Accepted papers should be sent by 15 October to be posted on the conference web page.

Selected papers might be published after the conference in a special issue of the European Journal of Economics and Economic Policies: Intervention (EJEEP) dedicated to SFC modeling.

Visit the conference website for udpdates: http://www.boeckler.de/35334_42480.htm

Joining sfc-models.net

Anybody interested in contributing to the discussion on stock-flow-consistent modeling is very welcome to join us.
However, to avoid a growing number of fake registration, you should email the administrator if you wish to get a user id on this web site. Thank you!

Back on-line

The web site was hacked, probably exploiting a weakness in the wordpress theme we adopt. Problems should have been resolved now.

Visualization and stock-flow norms

Hello,

I am writing an economics thesis and chose the stock-flow framework as my subject. I have past experience in system dynamics (SD) from a non-economics perspective and feel very at home with this approach. I am working my way through Monetary Economics and its models to grasp the concepts. It is interesting to think about the models in terms of SD. I have expressed a few of the simpler models in the book as SD models. SD gives very nice visualization and even interactivity, as you can experiment with constants. If anyone is interested I could upload a pic of how it looks.

I am interested in the principles and assumptions that is behind the SFC approach and guidelines for construction; like quadruple entries, stock/flow norms. What sets it apart from the general approach? Has anyone an overview or short description?

All the best,
Anders Vesterberg

Solving models over the internet

I have dropped the “social network” part of this website, including the Forum section, so I am replicating here a post meant to start a discussion…

I think it would be interesting and helpful to have some simple code for solving models over the internet, allowing visitors to a web site to change parameters, or size of a shock, and check the outcome of simulations.
A nice example, for a different class of models, has been developed here: http://p.seppecher.free.fr/jamel
Anyone interested in contributing?