Portier, Franck; Beaudry, Paul; Galizia, Dana; (2025) Macroeconomic Fluctuations as Emergent Behavior when Agents Interact and Accumulate. In: Bednar, J and Beinhocker, E and del Rio-Chanona, M and Farmer, JD and Kaszowska-Mojsa, J and Lafond, F and Pangallo, M and Pichler, A, (eds.) The Economy as an Evolving Complex System IV. Santa Fe Institute Press: Santa Fe, USA. (In press).

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Abstract

In most economic environments, agents interact with each other and accumulate diverse stocks such as capital or durable goods. This paper uses an agent-basedtype setup to clarify how different forms of interactions translate to different types of aggregate dynamics. In particular, we focus on the aggregate dynamic properties that can emerge when agents’ actions act as complements. The resulting dynamics depends on the strength of complementarities, how past accumulation decisions affect current actions, and the extent to which decisions are sluggish. Depending on the relative strength of such forces, we show how hysteresis, two-cycles or smooth limit cycles can emerge as aggregate outcomes.

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