Discussion Paper

No. 2013-9 | January 29, 2013

Luca Riccetti, Alberto Russo, and Mauro Gallegati

Unemployment Benefits and Financial Factors in an Agent-Based Macroeconomic Model

(Published in Special Issue Economic Perspectives Challenging Financialization, Inequality and Crises)

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Abstract

This paper is aimed at investigating the effects of government intervention through unemployment benefits on macroeconomic dynamics in an agent-based decentralized matching framework. The major result is that the presence of such a public intervention in the economy stabilizes the aggregate demand and the financial conditions of the system at the cost of a modest increase of both the inflation rate and the ratio between public deficit and nominal GDP. The successful action of the public sector is sustained by the central bank, which is committed to buy outstanding government securities.

Paper submitted to the special issue
Economic Perspectives Challenging Financialization, Inequality and Crises

JEL Classification

E32 C63

Cite As

Luca Riccetti, Alberto Russo, and Mauro Gallegati (2013). Unemployment Benefits and Financial Factors in an Agent-Based Macroeconomic Model. Economics Discussion Papers, No 2013-9, Kiel Institute for the World Economy. http://www.economics-ejournal.org/economics/discussionpapers/2013-9

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