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From Micro Behaviors to Macro Dynamics: An Agent-Based Economic Model with Consumer Credit

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Abstract

The paper develops an agent-based model populated by heterogeneous consumers, a productive sector and a banking sector. Taking a bottom up approach, the paper aims at providing a first tool to analyze households' borrowing dynamics in the different phases of the business cycle by relaxing some assumptions of mainstream consumption models and considering more realistic household borrowing behaviors. Although very simple, the model allows us to grasp the main implications of the interaction between consumers' wants (desired consumption), consumers' beliefs (their expectations about their future income), the behavior of the banking sector (rationing) and the behavior of the production sector (forecasting future demand). After presenting and discussing sensitivity analysis over a parameters' set, the paper reports results and the ex-post validation by comparing artificial and empirical distributions computed using the European Household Finance and Consumption Survey data set.

Suggested Citation

  • Paola D'Orazio & Gianfranco Giulioni, 2017. "From Micro Behaviors to Macro Dynamics: An Agent-Based Economic Model with Consumer Credit," Journal of Artificial Societies and Social Simulation, Journal of Artificial Societies and Social Simulation, vol. 20(1), pages 1-9.
    • Handle: RePEc:jas:jasssj:2016-43-4
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    Citations

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    Cited by:

    1. Claudius Graebner-Radkowitsch & Anna Hornykewycz & Bernhard Schuetz, 2022. "The emergence of debt and secular stagnation in an unequal society: a stockflow consistent agent-based approach," ICAE Working Papers 135, Johannes Kepler University, Institute for Comprehensive Analysis of the Economy.
    2. Mohd Abass Bhat & Geleta Demera Gomero & Shagufta Tariq Khan, 2024. "Antecedents of Savings Behaviour Among Rural Households: A Holistic Approach," FIIB Business Review, , vol. 13(1), pages 56-71, January.
    3. D'Orazio, Paola, 2019. "Income inequality, consumer debt, and prudential regulation: An agent-based approach to study the emergence of crises and financial instability," Economic Modelling, Elsevier, vol. 82(C), pages 308-331.
    4. Papadopoulos, Georgios, 2020. "Probing the mechanism: lending rate setting in a data-driven agent-based model," MPRA Paper 102749, University Library of Munich, Germany.

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