Journal on Policy and Complex Systems • Volume 5 , Number 2 • Fall 2019
System Structure of Agent-Based Model Responsible for Reproducing Business Cycles and the Effect of Tax Reduction on GDP
Abstract
Validation is an important issue in the agent-based modelling ( ABM ) approach . It has been argued in the literature that deriving the necessary conditions for reproducing specific macro behavior is difficult due to the functional complexity of the models . However , based on our experience in ABM , we believe it is possible to define the necessary conditions for reproducing each macro behavior if we use the structure of the system to express the input conditions . Conducting a series of computer experiments to verify this idea , the present study analyzes business cycles and the effect of tax reductions on gross domestic product ( GDP ) as examples of fundamental macro behaviors of economic systems . The results indicate that the essential model structures for reproducing business cycles and the effects of tax reduction are the inclusions of credit creation for investment and factors relating to the inefficiency of the government ’ s , household ’ s , and firms ’ expenditures .
Keywords : agent-based modeling ; model structure ; business cycle ; tax reduction ; inefficiency of government expenditure ; validity of model
37 doi : 10.18278 / jpcs . 5.2.4