Inequality and Financial Markets - A Simulation Approach in a Heterogeneous Agent Model

Fischer, Thomas
Teglio, Andrea (ed.) :
Inequality and Financial Markets - A Simulation Approach in a Heterogeneous Agent Model.
In: Managing Market Complexity - The Approach of Artificial Economics. Lecture notes in economics and mathematical systems (662). Springer, Berlin , S. 79-90. ISBN 978-3-642-31300-4
[Buchkapitel] , (2013)

Typ des Eintrags:

Buchkapitel

Erschienen:

2013

Herausgeber:

Teglio, Andrea

Autor(en):

Fischer, Thomas

Titel:

Inequality and Financial Markets - A Simulation Approach in a Heterogeneous Agent Model

Sprache:

Englisch

Buchtitel:

Managing Market Complexity - The Approach of Artificial Economics

Reihe:

Lecture notes in economics and mathematical systems

(Heft-)Nummer:

662

Ort:

Berlin

Verlag:

Springer

Fachbereich(e)/-gebiet(e):

01 Fachbereich Rechts- und Wirtschaftswissenschaften
01 Fachbereich Rechts- und Wirtschaftswissenschaften > Volkswirtschaftliche Fachgebiete
01 Fachbereich Rechts- und Wirtschaftswissenschaften > Volkswirtschaftliche Fachgebiete > Fachgebiet Makroökonomie und Finanzmärkte

Hinterlegungsdatum:

27 Jul 2012 09:51

Zusätzliche Informationen:

JEL-Classification: C63 - D31 - E21 - E44

Verwandte URLs:

http://www.springer.com/economics/econom...

Schlagworte in weiteren Sprachen:

Einzelne Schlagworte	Sprache
Heterogeneous Agent Model - Inequality - Financial Market Stability - Consumption - Colateral Constraints- Debt	Englisch

Alternatives Abstract:

Alternativer Abstract

Sprache

This paper presents a dynamic model with N heterogeneous consumers in the presence of financial markets allowing for saving and lending. Instead of adjusting their consumption based on utility maximization, agents use heuristics as suggested by behavioral theory. The main result of the model is that increased income inequality transforms into increased net worth inequality leading to increased price volatility on the market for durables. Unequal societies moreover are characterized by a current account surplus resulting from strong savings. Price volatility also increases if we increase heritage defined as the ratio of stock level of initial endowment to annual income. Medium size heritage on the other side increases the number of middle class households leading to a balanced current account. Extreme low or extreme high values for heritage contribute to a net debt situation with foreigners.

Englisch

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