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Agent-Based Computational Economics: Studying the Effect of Different Levels of Rationality on Inflation and Unemployment

Okasha, Ahmed and Johnson, Colin G. (2009) Agent-Based Computational Economics: Studying the Effect of Different Levels of Rationality on Inflation and Unemployment. In: 2009 IEEE Symposium on Computational Intelligence for Financial Engineering. IEEE, pp. 20-28. ISBN 978-1-4244-2774-1. (doi:10.1109/CIFER.2009.4937498) (KAR id:24098)

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http://dx.doi.org/10.1109/CIFER.2009.4937498

Abstract

This paper presents an agent-based computational economics model (ACE) to study demand-pull and cost-push inflation. Moreover, it studies the effect of different levels of rationality on the equilibrium price and unemployment rate. The model examines three different economies. In the first economy workers choose firms randomly, in the second economy there is loyalty between workers and firms. In the last scenario workers are persistence to find jobs. Simulations show that there is a positive relationship between equilibrium price and level of rationality while there is a negative relationship with unemployment rate. Moreover, the model is able to reproduce the behaviour of demand-pull inflation and cost-push inflation without homogeneous and perfectly rational agents assumptions.

Item Type: Book section
DOI/Identification number: 10.1109/CIFER.2009.4937498
Uncontrolled keywords: Agent-based modelling, bounded rationality, Inflation
Subjects: Q Science > QA Mathematics (inc Computing science) > QA 76 Software, computer programming,
Divisions: Divisions > Division of Computing, Engineering and Mathematical Sciences > School of Computing
Depositing User: Mark Wheadon
Date Deposited: 29 Mar 2010 12:14 UTC
Last Modified: 16 Feb 2021 12:34 UTC
Resource URI: https://kar.kent.ac.uk/id/eprint/24098 (The current URI for this page, for reference purposes)
Johnson, Colin G.: https://orcid.org/0000-0002-9236-6581
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