Agent-based modelling in economics by Lynne Hamill, Nigel Gilbert

By Lynne Hamill, Nigel Gilbert

Agent-based modelling in economics


Lynne Hamill and Nigel Gilbert, Centre for learn in Social Simulation (CRESS), collage of Surrey, UK


New equipment of monetary modelling were sought because of the worldwide fiscal downturn in 2008.This designated ebook highlights the advantages of an agent-based modelling (ABM) method. It demonstrates how ABM can simply deal with complexity: heterogeneous humans, families and corporations interacting dynamically. not like conventional tools, ABM doesn't require humans or businesses to optimise or fiscal structures to arrive equilibrium. ABM bargains how to hyperlink micro foundations on to the macro situation. 


Key features:

  • Introduces the idea that of agent-based modelling and exhibits the way it differs from latest approaches.
  • Provides a theoretical and methodological purpose for utilizing ABM in economics, in addition to functional suggestion on find out how to layout and create the models.
  • Each bankruptcy starts off with a quick precis of the appropriate fiscal concept after which indicates the way to practice ABM.
  • Explores either issues coated in simple economics textbooks and present very important coverage subject matters; unemployment, trade charges, banking and environmental issues.
  • Describes the versions in pseudocode, permitting the reader to improve courses of their selected language.
  • Supported by way of an internet site that includes the NetLogo versions defined within the book.


Agent-based Modelling in Economics provides scholars and researchers with the talents to layout, enforce, and learn agent-based versions. 3rd yr undergraduate, grasp and doctoral scholars, college economists will locate this booklet a useful resource.


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In the first stage, a model was built to generate a budget distribution to reproduce the income distribution observed in the United Kingdom, with a Gini coefficient of about a third and a P90/P10 ratio of about four. The second stage was to add a Cobb–Douglas utility function to generate preferences. Each household was then asked how much it would consume at different prices, and these were summed to produce an aggregate demand curve. This process established a traceable path from households’ utility functions and budgets to aggregate demand.

Each kind of fruit and vegetables will have a price set by the market trader. g. the wholesale price). These prices are arranged in the same order as the produce in fruit‐and‐veg, so, for example, if oranges is the third item in fruit‐and‐veg, the price of oranges will be the third item in fruit‐and‐veg‐prices. Both shoppers and traders need additions to their own variables: shoppers record the money that they spend for their fruit and vegetables in the variable spent, and traders have a price list containing the prices of each of the kinds of produce they have in stock.

But these are only averages, and within each quintile, there will have been variation too: so some of the poorest may spend more than 15% and some of the richest, less than 8%. To model these variations, a mean budget share (or alpha) is allocated to each budget quintile group together with the same standard deviation for all groups; and for each group, budget shares are distributed normally using those two parameters. 02). 21). 4. 102). 2. 6. 6. 6, and plotting the total against the price to generate that total.

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