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view/download model file: financial.nlogo
The model shows how idiosyncratic shocks on the firms can propagate in the whole economy through the credit sector producing macroeconomic fluctuations.
In this model there are 2000 firms. They sell and decide to invest. They finance the investment with the profits and by borrowing money from the bank system. The bank system lend money at each firms at different interest rates depending on the soundness of the firms. The firms sales heterogeneous goods and in each period the price of the goods change due to demand side shocks. If the shock is strong enough the firm can go bankrupt, the debt cannot be repaid to the bank system, the credit supply reduces and the interest rate increases for all the remaining firms. This mechanism possibly leads to other bankrupts for the effect of the increase in the interest rate.
New firm can enter in the economy depending on the average rate on interest in the economy.
"K medio" is the mean capital in the economy
"falliti" is the number of bankrupts
"Prodotto" is the log of the total product.
"bad debr" is the amount of lost credits by the bank system.
"tasso d'interesse" is the mean interest rate in the economy
"crescita" is the rate of growth of the total product.
Delli Gatti, Domenico, Corrado Di Guilmi, Edoardo Gaffeo, Gianfranco
Giulioni, Mauro Gallegati, Antonio Palestrini 2005, A New Approach to
Business Fluctuations: Heterogeneous Interacting Agents, Scaling Laws and
Financial Fragility, Journal of Economic Behavior and Organization, vol. 56,
pp.489-512
Delli Gatti, Domenico, Edoardo Gaffeo, Mauro Gallegati, Gianfranco Giulioni,
Antonio Palestrini 2006, Emergent Macroecomics. An Agent Based Approach
to Business Fluctuation. Avaible in internet:
http://www.dea.unian.it/gallegati/Emergent_Macroeconomics.pdf