Abstract
Agent-based computational economics (ACE) has been used for tackling major research questions in macroeconomics for at least two decades. This growing eld positions itself as an alternative to dynamic stochastic general equilibrium (DSGE) models. In this paper, we provide a much needed review and synthesis of this literature and recent attempts to incorporate insights from ACE into DSGE models. We rst review the arguments raised against DSGE in the macroeconomic ACE (macro ACE) literature, and then review existing macro ACE models, their explanatory power and empirical performance. We then turn to the literature
on behavioural New Keynesian models that attempts to synthesise these two approaches to macroeconomic modelling by incorporating insights of ACE into DSGE modelling. Finally, we provide a thorough description of the internally rational New Keynesian model, and discuss how this promising line of research can progress.
on behavioural New Keynesian models that attempts to synthesise these two approaches to macroeconomic modelling by incorporating insights of ACE into DSGE modelling. Finally, we provide a thorough description of the internally rational New Keynesian model, and discuss how this promising line of research can progress.
Original language | English |
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Pages (from-to) | 1134-1159 |
Journal | Journal of Economic Surveys |
Volume | 32 |
Issue number | 4 |
Early online date | 14 May 2018 |
DOIs | |
Publication status | Published - Sept 2018 |
Keywords
- Agent based computational economics
- Agent-based Macroeconomics
- Dynamic Stochastic General Equilibrium Models
- New Keynesian Behavioural Models
- Agent based modelling