Price dynamics, financial fragility and aggregate volatility

Antoine Mandel, Simone Landini, Mauro Gallegati and Herbert Gintis
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Simone Landini: Socioeconomic Research Institute of Piedmont - Socioeconomic Research Institute of Piedmont

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Abstract: Within a general equilibrium framework a la Long and Plosser (1983), we investigate the dynamics emerging from the interactions of households and firms that are adaptive price setters and financially constrained. Adaptive price-setting behavior induces micro founded out-of-equilibrium dynamics along which agents become heterogeneous in terms of prices and wealth. The stringency of the financial constraints determine the regime into which the model settles: either an equilibrium one or a disequilibrium one conductive to financial fragility and aggregate volatility. In this setting , we investigate how the structure of the production network a↵ects the emergence of aggregate volatility from micro-level price and financial shocks, hence providing a dynamical counterpart to recent results of Acemoglu and al (2012).

Keywords: Macroeconomic Volatility; Agent-Based Modeling; General Equilibrium; Financial Fragility (search for similar items in EconPapers)
Date: 2015-02-21
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-01152302v1
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Published in Journal of Economic Dynamics and Control, 2015, 51, pp.257-277. ⟨10.1016/j.jedc.2014.11.001⟩

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Related works:
Journal Article: Price dynamics, financial fragility and aggregate volatility (2015)
Working Paper: Price dynamics, financial fragility and aggregate volatility (2015)
Working Paper: Price dynamics, financial fragility and aggregate volatility (2015)
Working Paper: Price Dynamics, financial fragility and aggregate volatility (2013)
Working Paper: Price Dynamics, financial fragility and aggregate volatility (2013)
Working Paper: Price dynamics, financial fragility and aggregate volatility (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-01152302

DOI: 10.1016/j.jedc.2014.11.001

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