Analytical Political Economy

3 THE AGENT-BASED APPROACH TO POST KEYNESIAN MACRO-MODELING

Corrado Di Guilmi

Economics Discipline Group, University of Technology Sydney Centre for Applied Macroeconomic Analysis Australian National University

1. Introduction

In recent years, a growing body of literature has stemmed from the cross-fertilization of agent-based (AB) modeling and Post Keynesian (PK) macroeconomics. A number of scholars (especially young researchers within the AB modeling community) have started embodying elements of PK theory in their models, in particular the consistency of stocks and flows and the endogeneity of money. At the same time, and perhaps as a consequence of this, junior researchers as well as established scholars in the heterodox field have started looking at AB modeling as a possible alternative to the standard aggregative PK modeling approach. The attention that the mainstream has been forced to give to some traditionally PK research topics have reinforced this trend. Obvious examples are the interaction between the financial sector and the real economy after the Great Recession and inequality after the publication of Piketty's book.

The review is preceded by some considerations about the reasons that have led to the cross-fertilization between the two fields. In particular, the paper highlights the complementarities and the common pillars from an epistemological perspective. In fact, although AB modeling is, in its essence, an agnostic modeling strategy developed outside the realm ...