| Title |
On the Unsustainable Macroeconomy with Increasing Inequality of Firms Induced by Excessive Liquidity |
| ID_Doc |
77123 |
| Authors |
Zheng, WZ; Lou, YT; Chen, Y |
| Title |
On the Unsustainable Macroeconomy with Increasing Inequality of Firms Induced by Excessive Liquidity |
| Year |
2019 |
| Published |
Sustainability, 11, 11 |
| DOI |
10.3390/su11113075 |
| Abstract |
This research studies how excessive liquidity can trigger catastrophic economic crises in a stylized macroeconomic agent-based model (ABM). Previous studies showed the relevance of the income distribution to the economic crises, whereas we find, in a well-studied macroeconomic ABM endowed with diverse economic performance of firms, while providing moderate liquidity serves as an effective tool to stabilize the economy, excessive liquidity may cause abnormal dispersion of firm's wealth and the subsequent severe endogenous crises. The mechanism for such large-scale crises is found in the model as the increasing gap of financial fagility between the advantageous and disadvantageous groups of firms. Two factors, diverse production cycles and variable wages, are used to explore the robustness of the occurrence of crises. Moreover, our study shows that the leverage ratio based on aggregate values may underestimate the systemic risk. Hence, a proposal for the new design of the risk measurement in the macro-economy and insights into monetary policies for a sustainable economic development is given. |
| Author Keywords |
economic crisis; business cycle; agent-based computational economics; quantitative easing |
| Index Keywords |
Index Keywords |
| Document Type |
Other |
| Open Access |
Open Access |
| Source |
Science Citation Index Expanded (SCI-EXPANDED); Social Science Citation Index (SSCI) |
| EID |
WOS:000472632200080 |
| WoS Category |
Green & Sustainable Science & Technology; Environmental Sciences; Environmental Studies |
| Research Area |
Science & Technology - Other Topics; Environmental Sciences & Ecology |
| PDF |
https://www.mdpi.com/2071-1050/11/11/3075/pdf?version=1559283647
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