Abstract
We investigate the scale-free property of an agent-based macroeconomic model initially proposed by Wright (Physica A, 346:589–620, 2005), called the Social Architecture (SA) model. The SA model has been shown to be able to replicate a number of important features of a macroeconomy, such as patterns concerning economic growth, business cycles, industrial dynamics, and income distribution. We explore whether macroeconomic stylized features resulting from this model are robust when the number of agents populating the (model) economy varies. We simulate the model by systematically varying the agent population with 100, 500, 1,000, 2,000, 4,000, 8,000, and 10,000 agents. Our results indicate that the SA model does exhibit significant size effects for several important variables.
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Notes
- 1.
The EM principle is also known as the zero-intelligence agent in the literature. However, as Chen (2012) has argued, this term may be misleading since the behavioral assumption may have nothing to do with the cognitive abilities of agents. Therefore, we prefer using a different and a more formal term.
- 2.
For a survey of the use of the entropy-maximization principle in the agent-based modeling of economics and finance, the interested reader is referred to Ladley (2012).
- 3.
The simulations are performed using both MATLAB and NetLogo, and the codes are publicly available on the Internet (see Sect. 3).
- 4.
However, since the status of being an employee or an employer can change over time, a directed graph is more convenient.
- 5.
Notice that, since the amount of money is initially randomly distributed among all agents, we can only fix the money holding per capita, but not the possible distribution effect.
- 6.
Since we compare distributions across different sizes of the economy, we normalize the absolute value of the number of firm demises into ratios with respect to the size of the economy.
- 7.
See Wright (2005), p. 598, for the rationale behind doing so.
- 8.
For the less stringent case of p = 0. 05, a few combinations also exhibit size effects in addition to those in Table 3. The variables and the corresponding combinations are worker ratio (100/2,000, 100/8,000, 4,000/10,000, 8,000/10,000), firm demise ratio (1,000/2,000), wealth Gini (500/1,000), yearly wage share (8,000/10,000), firm growth (employment) (500/1,000, 500/2,000), rate of profit (100/500, 100/2,000, 500/2,000, 2,000/4,000), and recession yearly (4,000/10,000). However, the overall patterns concerning the size effects remain unchanged.
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Acknowledgements
The first and the last authors are grateful for the research support in the form of the Ministry of Science and Technology (MOST) Grants, MOST 103-2410-H-004-009-MY3 and MOST 104-2811-H-004-003, respectively.
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Chen, SH., Kao, YF., Chie, BT., Meyer, T., Venkatachalam, R. (2017). Size Effects in Agent-Based Macroeconomic Models: An Initial Investigation. In: Putro, U., Ichikawa, M., Siallagan, M. (eds) Agent-Based Approaches in Economics and Social Complex Systems IX. Agent-Based Social Systems, vol 15. Springer, Singapore. https://doi.org/10.1007/978-981-10-3662-0_11
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DOI: https://doi.org/10.1007/978-981-10-3662-0_11
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