Jan Hurt (CSH) will present an online talk within the seminar “Analysis of Complex Systems” on Friday, January 08, 2021 via Zoom. If you would like to attend, please email office@csh.ac.at
Title: Economic recovery with price-quantity dynamics in an agent-based input-output model
Abstract:
Sector-wise input-output tables are widely used to model the inter-industry dependencies of a national economy and how it responds to shocks, such as the economic recovery from disasters and pandemics. In conventional input-output analyses producers react to such shocks exclusively by adjusting the quantity of their produced goods only while prices remain fixed. Here, we propose an agent-based extension to these dynamic input-output recovery models in which producers can adjust their economic behaviour to external shocks by price and quantity adjustments simultaneously. The model is self-consistent in the sense that its production functions fulfill all economic constraints of the original Leontief input-output model at each time step of the dynamics. After the economy has absorbed the shock, the model allows for a continuum of different equilibrium configurations depending on whether producers are more likely to react by adjusting their produced quantities or the price of their products. To illustrate the model, we fit and evaluate it for the Austrian economy and how it absorbed the shock of the financial crisis in 2007/2008.