System Structure of Agent-Based Model Responsible for Reproducing Business Cycles and the Effect of Tax Reduction on GDP
relating to non-human entities , such as markets . Note also that the numerical values of variables are not crucial for the qualitative reproducibility of the social phenomenon , because the emergence of the macro phenomenon is insensitive to the numerical values of the variables .
Therefore , because ABM is a bottom-up modeling method , the macro phenomena that emerge in the model system will be similar to those of the real-world system if the system structure of the model defined as described above is similar to that of the real system . This principle holds true because , for any social phenomenon , there must be a causal mechanism where system structure is an input and the phenomenon is the output . In other words , if the factors that characterize the system structure of the model are different from those of the actual system , then the macro phenomena in question will not be reproduced , even qualitatively , in the model .
Therefore , in case of 100 % bottom-up model in ABM , we can conclude that the system structure of the model and the causality of any phenomenon in the model are the same as or similar to those of the real system if the phenomenon in question is qualitatively reproduced in the model . Moreover , this causal relationship between the system structure and the phenomenon can be elucidated by running a series of computer experiments , in which one factor relating to the system structure is systematically changed one by one , while other factors are kept constant .
In the present study , the facts that we could specify the conditions of the model necessary to reproduce business cycles and the positive effects of tax reductions , and that we could reason about the underlying mechanisms of the phenomena , are offered as evidence of the validity of the model in ABM , following the preceding principle .
Note also that the model structure that can reproduce the desired macro phenomena might not be unique because there might be multiple causes for each of the phenomena . However , this does not undermine the validity of the model mentioned above , because if different system structures cause the same phenomenon in the model , it is considered so even in the real system . In any cases , we can gain a better understanding of the causal mechanisms of the social phenomena by piling up the knowledge on the indispensable system structure for each of the macro phenomena .
6 . Conclusion
The necessary conditions of the
model structure for reproducing business cycles and the positive effects of tax reductions are analyzed using an agent-based model , which includes producers ’ activities of production , pricing and investment , consumers ’ buying and working activities , and the government ’ s activities of taxation and expenditure . As a result , the following findings were obtained .
1 . The factors necessary to reproduce business cycles are the inclusion of bank financing ( i . e ., credit creation ) and producers ’ demand-based investment decision-making .
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