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Simple Model Of Asymmetrical Business Cycles: Interactive Dynamics Of A Large Number Of Agents With Discrete Choices

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  • Aoki, Masanao

Abstract

A (jump) Markov process (generalized birth-and-death process) is used to model interactions of a large number of agents subject to field-type externalities. Transition rates are (nonlinear) functions of the composition of the population of agents classified by the choices they make. The model state randomly moves from one equilibrium to another, and exhibits asymmetrical oscillations (business cycles). It is shown that the processes can have several locally stable equilibria, depending on the degree of uncertainty associated with consequences of alternative choices. There is a positive probability of transition between any pair of such basins of attraction, and mean first-passage times between equilibria can be different when different pairs of basins are calculated.

Suggested Citation

  • Aoki, Masanao, 1998. "Simple Model Of Asymmetrical Business Cycles: Interactive Dynamics Of A Large Number Of Agents With Discrete Choices," Macroeconomic Dynamics, Cambridge University Press, vol. 2(4), pages 427-442, December.
    • Handle: RePEc:cup:macdyn:v:2:y:1998:i:04:p:427-442_00
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    Citations

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    Cited by:

    1. Fratantoni, Michael & Schuh, Scott, 2003. "Monetary Policy, Housing, and Heterogeneous Regional Markets," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 35(4), pages 557-589, August.
    2. Aoki, Masanao & Yoshikawa, Hiroshi, 2006. "Uncertainty, policy ineffectiveness, and long stagnation of the macroeconomy," Japan and the World Economy, Elsevier, vol. 18(3), pages 261-272, August.
    3. repec:ebl:ecbull:v:15:y:2003:i:6:p:1-7 is not listed on IDEAS
    4. Ausloos, Marcel & Miśkiewicz, Janusz & Sanglier, Michèle, 2004. "The durations of recession and prosperity: does their distribution follow a power or an exponential law?," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 339(3), pages 548-558.
    5. Muliere, Pietro & Suverato, Davide, 2014. "Income and Wealth Distributions in a Population of Heterogeneous Agents," Discussion Papers in Economics 20928, University of Munich, Department of Economics.
    6. Corrado Di Guilmi & Mauro Gallegati & Edoardo Gaffeo, 2003. "Power Law Scaling in the World Income Distribution," Economics Bulletin, AccessEcon, vol. 15(6), pages 1-7.
    7. Marcel Ausloos, 2014. "A biased view of a few possible components when reflecting on the present decade financial and economic crisis," Papers 1412.0127, arXiv.org.
    8. Miśkiewicz, Janusz & Ausloos, M., 2007. "Delayed information flow effect in economy systems. An ACP model study," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 382(1), pages 179-186.
    9. Michael S. Harr'e, 2018. "Multi-agent Economics and the Emergence of Critical Markets," Papers 1809.01332, arXiv.org.
    10. Toshihiro Shimizu, 2017. "Heterogeneity of expectations and financial crises: a stochastic dynamic approach," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 12(3), pages 539-560, October.
    11. Michael Fratantoni & Scott Schuh, 2000. "Monetary policy, housing investment, and heterogeneous regional markets," Working Papers 00-1, Federal Reserve Bank of Boston.

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