Series:

New Economic Windows

4 total works

Cover of The Distribution of Income and Wealth
This book presents a systematic overview of cutting-edge research in the field of parametric modeling of personal income and wealth distribution, which allows one to represent how income/wealth is distributed within a given population. The estimated parameters may be used to gain insights into the causes of the evolution of income/wealth distribution over time, or to interpret the differences between distributions across countries. Moreover, once a given parametric model has been fitted to a data set, one can straightforwardly compute inequality and poverty measures. Finally, estimated parameters may be used in empirical modeling of the impact of macroeconomic conditions on the evolution of personal income/wealth distribution. In reviewing the state of the art in the field, the authors provide a thorough discussion of parametric models belonging to the " -generalized" family, a new and fruitful set of statistical models for the size distribution of income and wealth that they have developed over several years of collaborative and multidisciplinary research. This book will be of interest to all who share the belief that problems of income and wealth distribution merit detailed conceptual and methodological attention.

Cover of Emergent Macroeconomics
by exploiting the disequilibrium and non linear relationships among economic aggregates. Prom an empirical point of view, this approach resemblaces the old NBER view, according to which: "the business cycle [. . . ] consists of - pansions occurring at about the same time in many economic activities, f- lowed by similairly general recessions, contractions, and revivals which merge into the expansion phase of the next cyxle" (Burns and Mitchell, 1946). They add that the movement, although recurrent, is not periodic, lasting from 1 to 12 years, and it is not divisible into shorter cycles. Of course, both approaches are not free from limits and inconsistencies. In spite of the equilibrium approach having nowadays became the workhorse of modern macroeconomics, for example, their users still find enormous d- ficulties in explaining why small shocks produce large fluctuations. A well known argument in multi sector real business cycle models (see e. g. Long and Plosser, 1983) is that as the number of sectors or industries considered in the analysis becomes large, aggregate volatility must tend to zero very quickly. This result, which follows directly from the Law of Large Numbers (LLN), rests on the hypothesis that each sector is periodically buffeted with idiosyncratic, identically and independently distributed shocks to Total F- tor Productivity (TFP).

Cover of Macroeconomics from the Bottom-up
This book arose from our conviction that the NNS-DSGE approach to the analysis of aggregate market outcomes is fundamentally flawed. The practice of overcoming the SMD result by recurring to a fictitious RA leads to insurmountable methodological problems and lies at the root of DSGE models’ failure to satisfactorily explain real world features, like exchange rate and banking crises, bubbles and herding in financial markets, swings in the sentiment of consumers and entrepreneurs, asymmetries and persistence in aggregate variables, and so on. At odds with this view, our critique rests on the premise that any modern macroeconomy should be modeled instead as a complex system of heterogeneous interacting individuals, acting adaptively and autonomously according to simple and empirically validated rules of thumb.
We call our proposed approach Bottom-up Adaptive Macroeconomics (BAM). The reason why we claim that the contents of this book can be inscribed in the realm of macroeconomics is threefold:
i) We are looking for a framework that helps us to think coherently about the interrelationships among two or more markets. In what follows, in particular, three markets will be considered: the markets for goods, labor and loanable funds. In this respect, real time matters: what happens in one market depends on what has happened, on what is happening, or on what will happen in other markets. This implies that intertemporal coordination issues cannot be ignored.
ii) Eventually, it’s all about prices and quantities. However, we are mostly interested in aggregate prices and quantities, that is indexes built from the dispersed outcomes of the decentralized transactions of a large population of heterogeneous individuals. Each individual acts purposefully, but she knows anything about the levels of prices and quantities which clear markets in the aggregate.
iii) In the hope of being allowed to purport scientific claims, BAM relies on the assumption that individual purposefulbehaviours aggregates into regularities. Macro behaviour, however, can depart radically from what the individual units are trying to accomplish. It is in this sense that aggregate outcomes emerge from individual actions and interactions.

Cover of Complex Agent-Based Models

Complex Agent-Based Models

by Mauro Gallegati

Published 10 October 2018

This book offers a thorough introduction to the highly promising complex agent-based approach to economics, in which agent-based models (ABMs) are used to represent economic systems as complex and evolving systems composed of heterogeneous agents of limited rationality who interact with each other, generating the system’s emergent properties in the process. 

This approach represents a response to the limitations of the dominant theory in economics, which does not consider the possibility of a major crisis, and to the inability of dynamic stochastic general equilibrium theory to generate empirically falsifiable propositions. In the new perspective, the focus is on identifying the elements of instability rather than the triggering event. As the theory of complexity demonstrates, the interactions of heterogeneous agents produce non-linearity: this puts an end to the age of certainties. 

With ABMs, the methodology is “from the bottom up”. The individualparameters and their distribution are estimated, and then evaluated to verify whether aggregate regularities emerge on the whole. In short, not only micro, but also meso and macro empirical validation are employed. Moreover, it shows that the mantra of growth should be supplanted by the concept of a growth​.
Given its depth of coverage, the book will enable students at the undergraduate and Master’s level to gain a firm grasp of this important emerging approach.

 

“This book is flower blossomed by one of the two greatest Italian economists.”

Bruce Greenwald, Columbia University

 

“The author’s - the ABM prophet’s - thoughts on economics have been at the forefront of the world. Without a firm belief in and dedication to human society, it is impossible to write such a book. This is a work of high academic value, which can help readers quickly understand the history and current situation of complex economic theory. In particular,we can understand the basic viewpoints, academic status, advantages and shortcomings of various schools of economic theory.”

Jie Wu, Guangzhou Milestone Software Co., China