The dynamics of leverage in a demand-driven model with heterogeneous firms

Di Guilmi, C; Carvalho, L

The dynamics of leverage in a demand-driven model with heterogeneous firms

Di Guilmi, C

Carvalho, L

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Publisher:: Elsevier
Publication Type:: Journal Article
Citation:: Journal of Economic Behavior and Organization, 2017, 140 pp. 70 - 90
Issue Date:: 2017-05-31

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Field	Value	Language
dc.contributor.author	Di Guilmi, C https://orcid.org/0000-0001-7786-039X	en_US
dc.contributor.author	Carvalho, L	en_US
dc.date.issued	2017-05-31	en_US
dc.identifier.citation	Journal of Economic Behavior and Organization, 2017, 140 pp. 70 - 90	en_US
dc.identifier.issn	0167-2681	en_US
dc.identifier.uri	http://hdl.handle.net/10453/124489
dc.description.abstract	This paper introduces heterogeneous microeconomic behavior into a demand-driven macroeconomic model in order to study the joint dynamics of leverage and capital accumulation. By identifying the links between firm level variables and aggregate quantities, the paper contributes toward a reformulation of the Minskyan formal analysis that explicitly considers the role of microeconomic factors in generating macroeconomic instability. The aggregation of heterogeneous agents is not only performed numerically, as in traditional agent-based models, but also by means of an innovative analytical methodology, originally developed in statistical mechanics and recently imported into macroeconomics. The distinctive feature is in that the joint analysis of the numerical and analytical solutions of the model sheds light on the effects of financial fragility at the firm level on the dynamics of the macroeconomy. In particular, the analysis of steady-state and stability properties of the system provide additional insights on the role of behavioral and size heterogeneity of firms for the stocks of aggregate debt and capital.	en_US
dc.publisher	Elsevier	en_US
dc.relation.ispartof	Journal of Economic Behavior and Organization	en_US
dc.relation.isbasedon	10.1016/j.jebo.2017.04.016	en_US
dc.subject.classification	Economics	en_US
dc.title	The dynamics of leverage in a demand-driven model with heterogeneous firms	en_US
dc.type	Journal Article
utslib.citation.volume	140	en_US
utslib.location.activity	Australia	en_US
utslib.for	1402 Applied Economics	en_US
utslib.for	1401 Economic Theory	en_US
utslib.for	1403 Econometrics	en_US
pubs.embargo.period	Not known	en_US
pubs.organisational-group	/University of Technology Sydney
pubs.organisational-group	/University of Technology Sydney/Faculty of Business
pubs.organisational-group	/University of Technology Sydney/Faculty of Business/Economics Discipline
utslib.copyright.status	closed_access
pubs.consider-herdc	true	en_US
pubs.publication-status	Published online	en_US
pubs.volume	140	en_US

Abstract:

This paper introduces heterogeneous microeconomic behavior into a demand-driven macroeconomic model in order to study the joint dynamics of leverage and capital accumulation. By identifying the links between firm level variables and aggregate quantities, the paper contributes toward a reformulation of the Minskyan formal analysis that explicitly considers the role of microeconomic factors in generating macroeconomic instability. The aggregation of heterogeneous agents is not only performed numerically, as in traditional agent-based models, but also by means of an innovative analytical methodology, originally developed in statistical mechanics and recently imported into macroeconomics. The distinctive feature is in that the joint analysis of the numerical and analytical solutions of the model sheds light on the effects of financial fragility at the firm level on the dynamics of the macroeconomy. In particular, the analysis of steady-state and stability properties of the system provide additional insights on the role of behavioral and size heterogeneity of firms for the stocks of aggregate debt and capital.

Please use this identifier to cite or link to this item:

http://hdl.handle.net/10453/124489