Macroeconomic ABM with Banking Instability and Macroprudential Rules
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1 collaborator
Rubén Osuna (Author)
Tags
crisis
Tagged by Rubén Osuna over 7 years ago
cycles
Tagged by Rubén Osuna over 7 years ago
macroeconomic
Tagged by Rubén Osuna over 7 years ago
Parent of 1 model: Version 2
Model was written in NetLogo 6.0.1
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WHAT IS IT?
The financial-economic crisis that started in 2008 has questioned all the previous equilibrium-based macroeconomic models (Dynamic Stochastic General Equilibrium models). The Agent-Based Models allow a more flexible and complex kind of models, where heterogeneity are easily incorporated and equilibrium is not a pre-imposed feature of the model. In ABMs individuals are not forced to solve any complex intertemporal optimization under the rational expectations hypothesis. Now we can assume more realistic assumptions and consider that the information is limited, there are trasaction costs, rationality is constrained, etc. This model is a specific implementaion of the model outlined in Assenza et al. (2015).
HOW IT WORKS
We simulate an economy with two kinds of Firms: (i) Firms that will produce Capital; and (ii) Firms which will produce final goods. There is some numbers of workers, which also are the consumers in this model, the workers offer worker force to the firms and receive a wage for this. If the workers has no job he try to find one visiting some amount of Firms. The productivity of capital and Labor are taken as constant in this model, as well as the wage; the wage are the same for the both kind Firms, so the workers will accept the first job offer he receive.
HOW TO USE IT
You just need to click in "Setup", and then click "Go Once" or "Go Forever". Each house represent one Firm, and each person we see represent one worker.
THINGS TO NOTICE
Look at the series of the Unemployment rate, note they are workers which are able to work and don't find a job, this reflect in the series of the GDP, that means, the production in this economy is not the full, there is some gap between the potential GDP and the actual GDP. The other graphics show the series of prices, the level price in the Capital goods, and the level price in the consumer goods.
THINGS TO TRY
We can see some interesting things emerging in the simulations from this model. For example, try to change a little the productivity of Labor - the first slider option - and take a look what happen with the series of the Unemployment rate below.
EXTENDING THE MODEL
The next steps will probably be to incorporate a stock market in which households invest their savings and to consider families, with the heterogeneity associated with age, retirement, child care, etc.
NETLOGO FEATURES
(interesting or unusual features of NetLogo that the model uses, particularly in the Code tab; or where workarounds were needed for missing features)
RELATED MODELS
(models in the NetLogo Models Library and elsewhere which are of related interest)
CREDITS AND REFERENCES
Details about this framework you may contact us: rosuna@cee.uned.es Also, there are some papers which could be very helpful, here are some: Assenza, Tiziana, Domenico Delli Gatti, and Jakob Grazzini. "Emergent dynamics of a macroeconomic agent based model with capital and credit." Journal of Economic Dynamics and Control 50 (2015): 5-28.
Comments and Questions
Click to Run Model
; Macro Agent Base Model (MABM) ; code written by Rubén Osuna, from the model of Assenza, Gatti, Grazzini et al. (2015) macro ABM (as coded by Elder Silva) extensions [ matrix r stats ] ; calling the R extension and the matrix extension globals [ taylor-interest-rate ; the interest rate. Conservative type: only inflation considered. Dual mandate: inflation and output gap. Three mandate: inflation, output gap and credit eta1 ; undifferentiated interest rate applied to loans of firms with the retail banks eta2 ; interest rate applied to loans of retail banks with the Central Bank eta3 ; interest rate applied to deposits of firms in the accounts of the retail banks eta4 ; interest rate applied to deposits of retail banks in the accounts of the Central Bank GDP ; sum of consumption, total-investment and public expenditures GDP_1 ; GDP of the last period (tick) P_GDP ; potential GDP Growth-Rate ; growth rate of the GDP Recession-lenght ; how many periods the GDP is decreasing Unemployment-Rate ; rate of unemployment Total-Consumption ; sum of goods sold by the consumptions firms Total-Investment ; sum of total capital sold by the capital production firms Goods-Price-Level ; sum (price * qt) / Qt sold Goods-Price-Level_1 ; the same, for the previous period Capital-Price-Level ; sum (price * qt) / Qt sold Capital-Price-Level_1 ; the same, for the previous period Total-Loans-Firms ; sum of loans of retail banks with firms of any kind Total-Loans-C-Firms ; sum of loans with the C-Firms Total-Loans-K-Firms ; sum of loans with the K-Firms Total-Central-Bank-Loans ; sum of loans of the retail banks with the Central Bank Total-Loans ; sum of loans in this economy (adding up the previous cathegories) Total-Loans_1 ; sum of loans in this economy for the previous period Total-Client-Loans ; this variable should be equal to Total-Loans, but calculated from banks' variables Total-Deposits ; sum of all deposits of the retail banks Total-Clients-Accounts ; this variable should be equal to Total-Deposits, but calculated from banks' variables Total-Deposits_1 ; sum of all deposits of the retail banks, previous period Total-Reserves ; sum of all reserves of the retail banks Total-Deposits-Workers ; sum of deposit at the bank of the households Total-Deposits-Capitalists ; sum of deposit at the bank of the capitalists Total-Deposits-C-Firms ; sum of deposit at the bank of the C-Firms Total-Deposits-K-Firms ; sum of deposit at the bank of the K-Firms Total-Interest-Payments ; sum of all interest payments from loaners to retail banks Total-Installment-Payments ; sum of all installment payments from loaners to retail banks C-Firms ; group of firms producing consumption goods K-Firms ; group of firms producing capital goods Workers ; group of households that offer work time Capitalists ; group of households that are owners of firms and banks and do not work for others Employed ; group of workers with an employment Unemployed ; group of workers without an employment C-Broke ; number of consumption firms that went broken last period K-Broke ; number of capital production firms that went broken last period B-Broke ; number of banks that went broken last period Matrix-C-Firms-Bankruptcy ; input with information that will be used in calculation into R (eq 23) Matrix-K-Firms-Bankruptcy ; input with information that will be used in calculation into R (eq 23) Matrix-Basel-Buffer ; input with information that will be used in calculation into R (eq 23) cpi ; consumer price index of this period cpi_1 ; consumer price index of the previous period inflation ; inflation of this period inflation_1 ; inflation of the previous period Wage-on-GDP ; total salaries as a percentage of the GDP, then wage = Wage-on-GDP * GDP / Number-of-Employees is the wage that keeps that proportion constant Wage-on-GDP_1 ; total salaries as a percentage of the GDP, then wage = Wage-on-GDP * GDP / Number-of-Employees is the wage that keeps that proportion constant Credit-on-GDP ; this is the basic ratio used in the Counter-Cyclical-Capital-Buffer defined in Basel III rules Credit-on-GDP_1 ; the same from the previous period Credit-on-GDP-Gap ; difference between current Credit-on-GDP and the long run trend State-budget ; how much money the Government owns at this stick State-budget_1 ; how much money the Government had the previous period. It is related to the cycle Leverage-Banks ; mean leverage of the Banks, the Central Bank has their numbers Central-Bank-Own-Capital ; the own capital of the central bank, a liability in its balance Account-of-State-at-Central-Bank ; Account of the State at the Central Bank Monetary-Base ; currency plus total reserves or public debt plus credits o the central bank to retail bank less Account-of-State-at-Central-Bank and the capital of the CB Currency ; bills and coins, the monetary base less total reserves Money-Supply ; menetary base multiplied by the money multiplier, which is the inverse of RR, the reserve ratio Capital-Buffer ; a % of the new loans acting like reserves QEasing? ; it is automatically set true if three periods of recession are observed PublicDebt ; public debt titles sold to the central bank PublicDebt_1 ; public debt titles sold to the central bank the previous period Wage ; uniform wage paid to the workers by C-Firms and K-Firms Wage_1 ; wage of the previous period Helped-Households ; how many households are being helped Beta_1-C-Firms ; parameter utilized by the banks to calculate the interest rate for the firms (eq 26) Beta_2-C-Firms ; parameter utilized by the banks to calculate the interest rate for the firms (eq 26) Beta_1-K-Firms ; parameter utilized by the banks to calculate the interest rate for the firms (eq 26) Beta_2-K-Firms ; parameter utilized by the banks to calculate the interest rate for the firms (eq 26) Mjc ; parameter utilized in the process "SubF-Call-Matrix-formation", related to C-Firms Mjk ; parameter utilized in the process "SubF-Call-Matrix-formation", related to K-Firms Mjb ; parameter utilized in the process related to the calculation of the Capital Buffer set in Basel III rules Current-Number-of-C-Firms ; current number of C-Firms, after losses and entries Current-Number-of-K-Firms ; current number of K-Firms, after losses and entries Current-Number-of-Workers ; current number of Workers, after losses and entries ] breed [ Banks Bank ] ; agent class breed [ Households Household ] ; agent class breed [ Firms Firm ] ; agent class directed-link-breed [ Hireds Hired ] ; link used to link firms to the worker directed-link-breed [ Owners Owner ] ; link used to link firms and banks to their owner/capitalist directed-link-breed [ Bankers Banker ] ; link used for connecting the clients with its bank Banks-own [ Clients-Accounts-C-Firms ; the total accounts (deposits) of C-Firms in this bank Clients-Accounts-K-Firms ; the total accounts (deposits) of K-Firms in this bank Clients-Accounts-Firms ; the sum of the former two variables Clients-Accounts-Workers ; the total accounts (deposits) of Workers in this bank Clients-Accounts-Capitalists ; the total accounts (deposits) of Capitalists in this bank Clients-Accounts-Households ; the total accounts (deposits) of Households (Workers and Capitalists) in this bank Clients-Accounts-at-the-Bank_1 ; the sum of all previous variables (sum of Firms and Households accounts), previous period Clients-Accounts-at-the-Bank ; the sum of all previous variables (sum of Firms and Households accounts) Clients-Loans-C-Firms ; the total loans of C-Firms in this bank Clients-Loans-K-Firms ; the total loans of K-Firms in this bank Clients-Loans-with-the-Bank_1 ; the total loans Firms in this bank, previous period Clients-Loans-with-the-Bank ; the total loans Firms in this bank Available-Credit-Basel2 ; maximum available credit under Basel II rules Available-Credit-Basel31 ; maximum available credit under Basel III rules, Global Capital Framework Available-Credit-Basel32 ; maximum available credit under Basel III rules, Global Liquidity Requirement Available-Credit-Basel ; maximum available credit under Basel rule Number-of-Firm-Clients Number-of-Household-Clients Number-of-Clients Own-Reserves ; the reserves of retail banks are deposited in the Central Bank, and they are rewarded with the eta4 Own-Bank-Capital ; bank own capital Need-Cash ; need of money after production, because the bank has losses and it does not have enough assets for paying it Bank-Equity ; Equity is the net worth, the difference between assets and liabilities Central-Bank-Loans ; loans from the Central Bank to the Retail Banks Profit ; sum of interest received less the bank losses with their loans PBT ; profits before taxes I-Received ; total interest payments of Firms to the Banks D-Received ; total installment pays of Firms to the Banks Assets ; total assets of retail banks Liabilities ; total liabilities of retail banks Overdraft ; losses of the bank so large than it cannot compensate it with own capital Shares ; the own-bank-capital divided by the total number of capitalists in this economy PBT ; profits before taxes ] Households-own [ Worker? ; property of the household, true if it is a worker, false if it is a capitalist Employed? ; property of the household, true if it is employed, false if it is unemployed Bankrupt? ; property of the household, true if the capitalist is broken and become a worker Human-Wealth ; variable used in determining how much of the entire wealth will be used for consumption Current-Income ; the salary if it is a worker, the profit if it is a capitalist Bank-Account-Household ; the total of wealth of the households held with the bank Desired-Consumption ; theorical value the household want to consume this period Consumption ; real value the household did consumption C-Firm-List ; list with the firms the household visited last period My-Nearest-Bank ; the nearest bank to the household ] Firms-own [ C-Firm? ; property of the firms, yes if it is a consumption production firm, not if is a capital production firm Owner? ; any firm may lose its owner, so this parameter sets the existence of not of an owner at a particular moment Price ; last price practiced by the firm Demand ; last quantity demanded Production ; actual production of the firm Stock ; amount available for sales (inventories) Delta ; parameter used to calculate new price Number-of-Employees ; actual number of employees of this firm Need-of-Employees ; ideal number of employees for this firm Vacancy ; number of opened places at this firm for new workers Revenue ; sum of quantity sold times the price Sales ; sum of quantity sold last period Profit ; revenue less the expenditures, considering taxes PBT ; profits before taxes Dividend ; part of the profit given to the owner, from firms and banks Overdraft ; difference between losses and firm's own resources Need-Cash ; need of money before production starts Bank-Account-Firm ; money available at the bank owned by the firms Leverage ; debts of the firm divided by their assets, including the debt, ranging between 0 and 1 (0 is zero debt, and 1, all assets are debt) Assets ; sum deposit at bank and stock available for sales Liabilities ; total liabilities of firms Equity-C-Firms ; assets minus liabilities, or net worth Equity-K-Firms ; assets minus liabilities, or net worth eta0 ; taylor-made interest rata calculated for every firm Current-Retail-Loans ; loans with the retail banks Cases-of-Bankruptcy ; the total number of bankruptcies by this firm Probability-of-Bankruptcy ; the probability of dying of the firm Available-Credit-Assenza ; maximum available credit under internal risk calculations of the bank Interest-Pay ; sum of interest rate payed last period Installment-Pay ; sum of the installment payed last period T-expected ; the expected life span for this firm Capital ; property of the C-firms, indicate the capital available to be used at the production process Desired-Investment ; property of the C-Firms, ideal investment needed K-Firm-List ; property of the C-Firms, list with the K-Firms the C-Firms visited last period trying to buy capital goods Investment ; property of the C-Firms, capital goods bough last period Investment-Memory ; property of the C-firms, parameter utilized to calculate te Desired-Investment Util-Capacity ; property of the C-Firms, indicates how much of the Capital had been used Stock_t-1 ; Stock available in t-1 My-Nearest-Bank ; the nearest bank to the firm ] ; TO SETUP to Setup clear-all ;Setup-Globals Short-Setup-Globals if Do_We_Have_Banks? [ Setup-Banks ] ; call the setup for banks if Do_We_Have_C-Firms? [ Setup-C-Firms ] ; call the setup for C-Firms if Do_We_Have_K-Firms? [ Setup-K-Firms ] ; call the setup for K-Firms if Do_We_Have_Workers? [ Setup-Workers ] ; call the setup for workers if Do_We_Have_Capitalists? [ Setup-Capitalists ] ; call the setup for Capitalists reset-ticks ; netlogo need this end ; The setup-globals is not being called. but if it is included into the setup it is not working, because some variable is not a defined global. to Short-Setup-Globals set C-Firms Firms with [ C-Firm? ] ; building the group with all C-Firms set K-Firms Firms with [ not C-Firm? ] ; building the group with all K-firms set Capitalists Households with [ not Worker? ] ; building the group with all Capitalist set Workers Households with [ Worker? ] ; building the group with all workers if not Random-Seed? [ random-seed 12345 ] ; random seed may or not be used end to Setup-Globals ; call the setup for globals set taylor-interest-rate natural-interest-rate ; the interest rate set by the central bank set GDP 0 ; initial GDP set GDP_1 0 ; GDP of the previous period set Recession-lenght 0 ; number of periods with GDP falls set Unemployment-rate 0 ; initial Unemployment rate set Total-Consumption 0 ; initial value of consumption set Total-Investment 0 ; initial value of total investment set Goods-Price-Level 1 ; initial goods price level, necessary minimum for taking logarithms later set Capital-Price-Level 1 ; initial capital goods price level, necessary minimum for taking logarithms later set Goods-Price-Level_1 0.5 ; initial goods price level of the previous period, necessary minimum for taking logarithms later set Capital-Price-Level_1 0.5 ; initial capital goods price level of the previous period, necessary minimum for taking logarithms later set Wage Minimum-Wage ; initial value for the wage set Wage_1 0 ; initial value for the wage of the previous period set cpi 0 ; consumer price index of this period set cpi_1 0 ; consumer price index of the previous period set inflation 0 ; inflation of this period set inflation_1 0 ; inflation of the previous period set Wage-on-GDP 0 ; total salaries as a percentage of the GDP, then wage = Wage-on-GDP * GDP / Number-of-Employees is the wage that keeps that proportion constant set Wage-on-GDP_1 0 ; total salaries as a percentage of the GDP, then wage = Wage-on-GDP * GDP / Number-of-Employees is the wage that keeps that proportion constant set Credit-on-GDP 0 ; this is the basic ratio used in the Counter-Cyclical-Capital-Buffer defined in Basel III rules set Credit-on-GDP_1 0 ; this is the basic ratio used in the Counter-Cyclical-Capital-Buffer defined in Basel III rules set Total-Loans-Firms 0 ; initial value for total loans of retail banks and firms set Total-Loans-C-Firms 0 ; initial value for C-loans set Total-Loans-K-Firms 0 ; initial value for K-loans set Total-Central-Bank-Loans 0 ; initial value for the total loans of retail banks and central bank set Total-Loans 0 ; initial value for the total loans in this economy set Total-Loans_1 0 ; sum of loans in this economy for the previous period set Total-Deposits-Workers 0 ; sum of deposit at the bank of the households set Total-Deposits-Capitalists 0 ; sum of deposit at the bank of the capitalists set Total-Deposits-C-Firms 0 ; sum of deposit at the bank of the C-Firms set Total-Deposits-K-Firms 0 ; sum of deposit at the bank of the K-Firms set Total-Deposits 0 ; sum of all deposits of retail banks set Total-Deposits_1 0 ; sum of all deposits of retail banks, previous period set Total-Reserves 0 ; the reserves of retail banks are deposited in the Central Bank, and they are rewarded with the eta4 set Total-Interest-Payments 0 ; total interest payments of firms to reatail banks for loans received set Total-Installment-Payments 0 ; total installment payments firms to reatail banks for loans received ; the Available-Credit-Basel is a bank propertie, not a global. Need to be relocated to bank setup ;set Available-Credit-Basel 0 ; this is the credit limit to retail banks from Basel macroprudential rules ;set Available-Credit-Basel2 0 ; maximum available credit under Basel II rules ;set Available-Credit-Basel31 0 ; maximum available credit under Basel III rules, Global Capital Framework ;set Available-Credit-Basel32 0 ; maximum available credit under Basel III rules, Global Liquidity Requirement ; ^^^^^^^^ to be relocated set State-Budget 0 ; initial value for State-Budget set C-Firms Firms with [ C-Firm? ] ; building the group with all C-Firms set K-Firms Firms with [ not C-Firm? ] ; building the group with all K-firms set Capitalists Households with [ not Worker? ] ; building the group with all Capitalist set Workers Households with [ Worker? ] ; building the group with all workers set Employed Workers with [ Employed? ] ; building the group with all employed workers set Unemployed Workers with [ not Employed? ] ; building the group with all unemployed workers set Helped-Households 0 ; number of households helped by the State set Central-Bank-Own-Capital sum [Initial-equity-of-the-bank ] of Banks ; the own capital of the central bank, a liability in its balance set Account-of-State-at-Central-Bank 0 ; Account of the State at the Central Bank set Matrix-C-Firms-Bankruptcy matrix:make-constant 2 Time-Window1 0 ; building the initial matrix which will be used by R-Netlogo later, it is a constant matrix of zeroes with 2 rows and "T-W1" columns set Matrix-K-Firms-Bankruptcy matrix:make-constant 2 Time-Window1 0 ; building the initial matrix which will be used by R-Netlogo later, it is a constant matrix of zeroes with 2 rows and "T-W1" columns set Matrix-Basel-Buffer matrix:make-constant 2 Time-Window2 0 ; building the initial matrix which will be used by R-Netlogo later, it is a constant matrix of zeroes with 2 rows and "T-W2" columns set Mjc 0 ; helper with the matrix above set Mjk 0 ; helper with the matrix above set Mjb 0 ; helper with the matrix above set Probability-of-Bankruptcy 0 ; probability of a firm of dying, explained by the leverage of that firm set PublicDebt 0 ; public debt titles sold to the central bank set PublicDebt_1 0 ; public debt titles sold to the central bank the previous period if not Random-Seed? [ random-seed 12345 ] ; random seed may or not be used end to Setup-Banks create-Banks Number-of-Banks [ ; create n banks, determined in a global variable setxy random-xcor random-ycor ; place them randomly move-to one-of patches with [not any? Firms-here] ; if a C-Firm or K-Firm is at the same patch, move the Bank to another empty patch in the setup process set shape "house" ; just for fun, not necessary for the model, used only for display in HUD netlogo set size 2 ; just for fun, not necessary for the model, used only for display in HUD netlogo set color turquoise ; just for fun, not necessary for the model, used only for display in HUD netlogo set Own-Bank-Capital Initial-equity-of-the-bank ; explicit set Bank-Equity Own-Bank-Capital ; this is the initial equity of the bank set Clients-Accounts-C-Firms 0 ; the total accounts (deposits) of C-Firms in this bank set Clients-Accounts-K-Firms 0 ; the total accounts (deposits) of K-Firms in this bank set Clients-Accounts-Firms 0 ; the sum of the former two variables set Clients-Accounts-Workers 0 ; the total accounts (deposits) of Workers in this bank set Clients-Accounts-Capitalists 0 ; the total accounts (deposits) of Capitalists in this bank set Clients-Accounts-Households 0 ; the total accounts (deposits) of Households (Workers and Capitalists) in this bank set Clients-Accounts-at-the-Bank_1 0 ; the sum of all previous variables (sum of Firms and Households accounts), previous period set Clients-Accounts-at-the-Bank 0 ; the sum of all previous variables (sum of Firms and Households accounts) set Clients-Loans-C-Firms 0 ; the total loans of C-Firms in this bank set Clients-Loans-K-Firms 0 ; the total loans of K-Firms in this bank set Clients-Loans-with-the-Bank_1 0 ; the total loans Firms in this bank, previous period set Clients-Loans-with-the-Bank 0 ; the total loans Firms in this bank set Number-of-Firm-Clients 0 set Number-of-Household-Clients 0 set Number-of-Clients 0 set Available-Credit-Basel2 0 ; maximum available credit under Basel II rules set Available-Credit-Basel31 0 ; maximum available credit under Basel III rules, Global Capital Framework set Available-Credit-Basel32 0 ; maximum available credit under Basel III rules, Global Liquidity Requirement set Available-Credit-Basel 0 ; maximum available credit under Basel rules set Own-Reserves 0 ; reserves of the bank, deposits multiplied by the reserve requirement set Need-Cash 0 ; initial value for cash needed after production, because heavy losses set Profit 0 ; revenue less the expenditures, considering taxes set PBT 0 ; profits before taxes set I-Received 0 ; local variable set D-Received 0 ; local variable set Overdraft 0 ; this is the difference betwween own liquid assets and losses ; properties relocated from the setup-globals set Available-Credit-Basel 0 ; this is the credit limit to retail banks from Basel macroprudential rules set Available-Credit-Basel2 0 ; maximum available credit under Basel II rules set Available-Credit-Basel31 0 ; maximum available credit under Basel III rules, Global Capital Framework set Available-Credit-Basel32 0 ; maximum available credit under Basel III rules, Global Liquidity Requirement ] end to Setup-C-Firms ask n-of Number-of-C-Firms patches [ ; this command asks a number of patches controlled by a slider with random coordinates sprout-Firms 1 [ ; ask to create one firm at these patches move-to one-of patches with [not any? Firms-here] ; if a C-Firm and K-Firm are at the same patch, move the K-Firm in the setup process set shape "factory" ; just for fun, not necessary for the model, used only for display in HUD netlogo set size 2 ; just for fun, not necessary for the model, used only for display in HUD netlogo set color orange ; just for fun, not necessary for the model, used only for display in HUD netlogo set C-Firm? true ; proper of the Firms, true means it is a consumption producer firm set Owner? true ; this firm will have an owner set Price 2 ; initial value for price set Capital Initial-capital ; initial value for capital set Stock Initial-production-C-firms ; initial value for stock set Production Initial-production-C-firms ; initial value for production set Revenue 0 ; initial value for revenue set Sales 0 ; initial value for sales set Profit 0 ; revenue less the expenditures, considering taxes set PBT 0 ; profits before taxes set Need-Cash 0 ; initial value for cash needed before production, because lack of liquidity for starting it set Cases-of-Bankruptcy 0 ; the total number of bankruptcies by this firm set Available-Credit-Assenza 0 ; maximum available credit under internal risk calculations of the bank set Desired-Investment 0 ; initial value for desire investment set Investment 0 ; initial value for investment set Number-of-Employees 0 ; initial value for number of employees set Need-of-Employees 0 ; initial value for desire employees set K-Firm-List [ ] ; setup for the list which will be used to colect the K-Firms visited set Vacancy 0 ; initial value for vacancy set Bank-Account-Firm Initial-liquidity-of-Firms ; initial money deposited at the bank by the firms set Investment-Memory Initial-Capital ; initial value for Investment-Memory, parameter utilized to calculate the desire investment set Util-Capacity 0 ; initial value for util-capacity create-banker-from min-one-of banks [distance myself] [set hidden? true] ; this create a link between the bank and the capitalist set My-Nearest-Bank min-one-of banks [distance myself] ; this bank is the same to which the C-Firms is now linked with a "banker" relationship ] ] end to Setup-K-Firms ask n-of Number-of-K-Firms patches [ ; this command asks a number of patches controlled by a slider randomly selected sprout-Firms 1 [ ; ask to create one firm in each of those patches move-to one-of patches with [not any? Firms-here] ; if a C-Firm and K-Firm are at the same patch, move the K-Firm in the setup process set shape "factory" ; just for fun, not necessary for the model, used only for display in HUD netlogo set size 2 ; just for fun, not necessary for the model, used only for display in HUD netlogo set color green ; just for fun, not necessary for the model, used only for display in HUD netlogo set C-Firm? false ; proper of Firms, false mean it is a capital producer firm set Owner? true ; this firm will have an owner set Price 2 ; initial value for price set Stock Initial-production-K-firms ; initial value for stock set Production Initial-production-K-firms ; initial value for production set Revenue 0 ; initial value for revenue set Sales 0 ; initial value for sales set Profit 0 ; revenue less the expenditures, considering taxes set PBT 0 ; profits before taxes set Need-Cash 0 ; initial value for cash needed before production, because lack of liquidity for starting it set Cases-of-Bankruptcy 0 ; the total number of bankruptcies by this firm set Available-Credit-Assenza 0 ; maximum available credit under internal risk calculations of the bank set Desired-Investment "" ; not applied to K-Firms set Investment "" ; not applied to K-Firms set Number-of-Employees 0 ; initial number for employees set Need-of-Employees 0 ; initial value for desired employees set Vacancy 0 ; initial value for vacancy set Bank-Account-Firm Initial-liquidity-of-Firms ; initial money deposited at the banks by the firms set Investment-Memory "" ; not applied to K-Firms set Util-Capacity "" ; not applied to K-Firms create-banker-from min-one-of banks [distance myself] [set hidden? true] ; this create a link between the bank and the capitalist set My-Nearest-Bank min-one-of banks [distance myself] ; this bank is the same to which the K-Firms is now linked with a "banker" relationship ] ] end to Setup-Workers create-Households Number-of-Workers [ setxy random-xcor random-ycor ; the initial position of the worker is random set shape "person" ; just for fun, not necessary for the model, used only for display in HUD netlogo set size 1.25 ; just for fun, not necessary for the model, used only for display in HUD netlogo set color yellow ; just for fun, not necessary for the model, used only for display in HUD netlogo set Worker? true ; property of the household, "true" indicates it is a worker set Employed? false ; all workers are unemployed at the start set Human-Wealth 1 ; initial value for Human Wealth, utilized to calculate the consumption process set Current-Income 0 ; intitial income set Bank-Account-Household Initial-households-personal-assets ; initial value of deposits at the banks set Desired-Consumption 0 ; initial value for desired Consumption set Consumption 0 ; initial value for Consumption set C-Firm-List [ ] ; setup for the list which will be used to record the C-Firms visited create-banker-from min-one-of banks [distance myself] [set hidden? true] ; this create a link between the bank and the capitalist set My-Nearest-Bank min-one-of banks [distance myself] ; this bank is the same to which the Worker is now linked with a "banker" relationship ] end to Setup-Capitalists create-Households (Number-of-C-Firms + Number-of-K-Firms) [ ; one capitalist for each firm distributed ramdomly in space setxy random-xcor random-ycor ; the initial position of the worker is random set shape "person" ; just for fun, not necessary for the model, used only for display in HUD netlogo set size 1.25 ; just for fun, not necessary for the model, used only for display in HUD netlogo set color white ; just for fun, not necessary for the model, used only for display in HUD netlogo set Worker? false ; proper of the household, false means it is a capitalist set Bankrupt? false set Human-Wealth 1 ; initial value for human wealth set Current-Income 0 ; initial value for current income set Bank-Account-Household Initial-households-personal-assets ; initial value for deposit at bank set Desired-Consumption 0 ; initial value for Desired-Consumption, D-C is the budget allocated to consumption set Consumption 0 ; initial value of Consumption set C-Firm-List [ ] ; setup for the list which will be used to collect the price of the C-Firms visited create-owner-from one-of Firms with [not any? out-link-neighbors] [set hidden? true] ; this create a link between the firm and the capitalist create-banker-from min-one-of banks [distance myself] [set hidden? true] ; this create a link between the bank and the capitalist set My-Nearest-Bank min-one-of banks [distance myself] ; this bank is the same to which the Capitalist is now linked with a "banker" relationship ] end ; TO GO to Go Function-Job-Market ; this function plays the job market process Function-Consumption-Market ; this function plays the consumption market process Function-Capital-Market ; this function plays the capital market process Function-UpDate-Production ; this function plays the production process Function-UpDate-Globals ; this function update the globals Function-Cash-Flows-Dividends ; this function update the cash flow and set the dividends Function-Credit-Market ; this function update the credit market Function-Central-Bank ; this function give loans to the banking system and set macropudential rules and monetary policy Function-State-Manage-Budget ; the government appears getting taxes and giving subsidies to families, helping banks and during a crisis period and selling public debt Function-Update-System tick ; netlogo needs this because it controlates time end ; FUNCTIONS ; TO FUNCTION-JOB-MARKET To Function-Job-Market ; here will be called the subfunctions ask Firms [ ; reset the firms need for cash and update the desire workers number SubF-UpDate-Desired-Workers set Need-Cash 0 ] ask Workers with [Current-Income = 0] [ ; ask workers which do not have a job to look for one SubF-Find-a-Job ] ask Workers [ set Bank-Account-Household Bank-Account-Household + Current-Income ] ; ask workers to update their income ask Firms [ set Bank-Account-Firm Bank-Account-Firm - Number-of-Employees * wage ] ; ask firms to update their bank account end to SubF-UpDate-Desired-Workers ; this subfunction update the desired workers if C-Firm? [ ; only C-Firms run this set Need-of-Employees min list Need-of-Employees ((Capital * Productivity-of-capital) / Productivity-of-labor) ; set desire employee considering the capital production restriction (Assenza, Gatti, Grazzini et al. 2015, eq. 5.9) if Hiring-Rationality? [ ; if this switch is on, the firm will hire employees limited to the Bank-Account-Firm resources if Need-of-Employees * Wage > Bank-Account-Firm [ ; if Need-of-Employees multiplied by wage is larger than the Bank-Account, the Need-of-Employees is updated set Need-of-Employees max list 0 (int (Bank-Account-Firm / Wage) + 1) ; update the desired employees considering the money available ] ] ] set Vacancy Need-of-Employees - Number-of-Employees ; opening new vacancies to contract more employees while [Vacancy < 0 and Number-of-Employees > 0] [ ; if vacancy < 0 the firm needs to fire someone ask one-of my-out-hireds [ ; choose one employee ask other-end [ ; ask this employee to set... set Current-Income 0 ; their income as 0, it was fired (die) set Employed? false ; the worker is now unemployed ] die ; "die" means this worker is fired (the link disappears) ] set Vacancy Vacancy + 1 ; record the fired worker set Number-of-Employees Number-of-Employees - 1 ; update the number of employees after the firing process ] end to SubF-Find-a-Job ; this subfunction is used by the worker trying to find a job position let extension 0 repeat 3 [ ; the worker will repeteat the process two times if Employed? = true [ stop ] ; if the worker finds a job the seach process stops let aFirm one-of Firms in-radius (radius-for-employment-search + extension) with [Vacancy > 0 ] ; the worker looks for a firm around him with vacancies if aFirm != nobody [ create-hired-from one-of Firms-here [set hidden? true] ; this link means the worker has a job in a firm, and the two know about eachother set Current-Income Wage * (1 - tax1) ; update the current-income of the worker set State-Budget State-Budget + wage * tax1 ; the tax on income goes to the State set Employed? true ; the worker is employed now ask aFirm [ set Number-of-Employees Number-of-Employees + 1 ; update the number of employees set Vacancy Vacancy - 1 ; update the vacancies ] ] if aFirm = nobody [ set Current-Income 0 set extension extension + 10 ; a new search starts widening the radius ] ] if Do_We_Have_State? = true and Employed? = false [ SubF-Get-Unemployment-Benefits ; get unemployment benefits if the worker is unemployed ] end to SubF-Get-Unemployment-Benefits let Unemployment-Benefit Wage * Unemployment-Cover ; the unemployment benefits is a fraction (= u-cover) of the wage ifelse Do_We_Have_Central-Bank? = true and QEasing? = true [ ; if there is a Central Bank and Quantitative Easing policy, this authority will buy any amount of Public Debt, so there are no constraints set Current-Income Unemployment-Benefit ; if the worker is unemployed and his/her Current income is zero the State pays unemployment benefits set State-Budget State-Budget - Unemployment-Benefit ; the tax on income goes to the State set Helped-Households Helped-Households + 1 ; the total number of households helped is increased ] [ if State-Budget >= Unemployment-Benefit [ ; if there is enough budget available the State pays the benefits, and the Central Bank help is unnecessary set Current-Income Unemployment-Benefit ; if the worker is unemployed and its Current income is zero the State pays unemployment benefits, a tax free subsidy set State-Budget State-Budget - Unemployment-Benefit ; the tax on income goes to the State set Helped-Households Helped-Households + 1 ; the total number of households helped is increased ] ] end ; FUNCTION-CONSUMPTION-MARKET to Function-Consumption-Market ; here will be called the subfunctions of the consumption market ask C-Firms [ set Demand 0 set Sales 0 set Revenue 0 ] ; updating properties of the C-Firms ask Households [ ; explicit SubF-UpDate-Desired-Consumption ; call subfunction for households update their desired consumption SubF-Visit-C-Firms ; call subfunction for households visit firm trying to consume if Desired-Consumption > 0 [ SubF-Try-Consume ] ; if the household wish to consume something, it tries to buy it ] end to SubF-UpDate-Desired-Consumption set Human-Wealth (Memory-parameter-human-wealth * Human-Wealth) + (1 - Memory-parameter-human-wealth) * Current-Income ; update human wealth (eq 2) set Desired-Consumption min list Bank-Account-Household ((Fraction-of-wealth-devoted-to-consumption * Bank-Account-Household) + Human-Wealth) ; update desired consumption, it can not be higher than the money the household has set Desired-Consumption max list 0 Desired-Consumption ; this ensures the desired consumption is not negative end to SubF-Visit-C-Firms ; this subfunction rules the shopping process, visiting the firms set C-Firm-List sort-by [ [?1 ?2] -> [Price] of ?1 < [Price] of ?2] C-Firms in-radius 30 with [Stock > 0] ; we build a list with the C-Firms in the neighborhood ordered by price, assuming the household doesn't have the prices of all C-Firms because of time constraints end to SubF-Try-Consume ; the household doesn't take the lowest price... let listposition floor random-gamma 1.2 0.66 ; ... but applies a distribution to the ordered list, because information is not perfect, scale = 1/lambda, shape/lamda 1.2/0.66 CDF: 0 (0) 1 (0.39) 2 (0.66) 3 (0.81) 4 (0.90) if listposition >= (length C-Firm-List) [set listposition 0] ; in this way we increase the probability of the lowest price, by adding up those cases in which the gamma give us a number larger than the length of the list print listposition let Selected-C-Firm (item listposition C-Firm-List) ; auxiliar variable let Qtt Desired-Consumption / [Price] of Selected-C-Firm ; total number of consumption goods desired let expenses 0 ; auxiliar variable to update the deposit at bank later let new-cons 0 ; auxiliar variable to record the quantity consumed while [Qtt > 0 and empty? C-Firm-List = false] [ ; if there is desired-consumption not satisfied and the list of firms is not empty... ask Selected-C-Firm [ ifelse [Stock] of Selected-C-Firm > Qtt [ ; if there are enough available goods at the first firm ... set Demand Demand + Qtt ; update the demand of Selected-Firm set Stock Stock - Qtt ; updated the stock of the firm set Sales Sales + Qtt ; update the sales set Revenue Revenue + Price * Qtt ; update the revenue set Expenses Expenses + Price * Qtt * (1 + tax3) ; update the auxiliar variable, used later to update the household bank account set State-Budget State-Budget + Price * Qtt * tax3 ; update State's budget considering consumption taxes (tax3) set new-cons new-cons + Qtt ; update the auxiliar variable to register the qtt consumed set Qtt 0 ; means no need to bought anymore ] [ ; second situation, buying only part at the first firm set Sales Sales + Stock ; update sales set Revenue Price * Stock + Revenue ; update revenue set expenses Price * Stock * (1 + tax3) + expenses ; update auxiliar variable, later used to update the bank account of the household set State-Budget State-Budget + Price * Stock * tax3 ; update State income set new-cons new-cons + Stock ; update stock set Qtt Qtt - Stock ; update auxiliar variable to register the Qtt consumed, Qtt = Qtt - S set Stock 0 ; update stock ] ] set C-Firm-List remove-item listposition C-Firm-List ; we remove the Firm with depleted Stock set listposition floor random-gamma 1.2 0.66 ; the firm don't take the lowest price, but applies a distribution to the list, because information is not perfect, scale = 1/lambda, shape/lamda 1.2/0.66 CDF: 0 (0) 1 (0.39) 2 (0.66) 3 (0.81) 4 (0.90) if listposition >= (length C-Firm-List) [set listposition 0] ; in this way we increase the probability of the lowest price, by adding up those cases in which the gamma give us a number larger than the length of the list, the maximum length of the list set Selected-C-Firm (item listposition C-Firm-List) ; auxiliar variable, record the quantity that can be bought, DC/Pa ] set Consumption new-cons ; update the Consume of the households, the real value that the household did consume set Bank-Account-Household Bank-Account-Household - expenses ; update the bank account of the households with the remaining money after the purchasing process end ; FUNCTION-CAPITAL-MARKET to Function-Capital-Market ; this function set the rules for the capital goods market ask K-Firms [ ; update K-Firms properties set Demand 0 set Revenue 0 set Sales 0 ] ask C-Firms [ ; updating the C-Firms properties set Investment 0 SubF-UpDate-Investment-Desire ; call sub-function to update investment if Desired-Investment > 0 [ SubF-UpDate-Investment ] ; if there is need for investment call the sub-function for investment ] end to SubF-UpDate-Investment-Desire ; sub-function with procedure to update the investment need of a C-Firm set Desired-Investment 0 ; reset variable let rand random-float 1 ; auxiliar sub-function variable if rand < Probability-of-investing [ ; check if it is time to invest, because only a fraction of C-Firms (= probability) can invest if ticks > 1 [ ; assure that there is no investment in time equal zero set Investment-Memory (Memory-parameter-investment * Investment-Memory) + (1 - Memory-parameter-investment) * Util-Capacity * Capital ; begin of equation of capital motion (eq 10 & Assenza, Gatti, Grazzini et al. 2015, p. 12) set Desired-Investment max list 0 (( (1 / Desired-capacity-utilization-rate) + (Depreciation-of-capital-C / Probability-of-investing) ) * Investment-Memory - Capital) ; end of equation of capital motion (eq 12 & Assenza, Gatti, Grazzini et al. 2015 eq. 5.7) ] ] end to SubF-UpDate-Investment ; this subfunction is called when there is need for investment (asking C-Firms) if Desired-Investment > 0 [ ; just trying to find product in two diferents K-Firms SubF-Visit-K-Firms ; make a list with all K-Firms, take note of their prices SubF-Buy-Capital ; sub-function used to bought capital ] end to SubF-Visit-K-Firms ; this subfunction rules the shopping process, visiting the firms set K-Firm-List sort-by [ [?1 ?2] -> [Price] of ?1 < [Price] of ?2] K-Firms with [Stock > 0] ; we build a list with the all the K-Firms ordered by price. We have the prices of all K-Firms because they are few and capital is expensive end ; C-Firms have no constraits and they have a complete list and make no mistakes in ordering the prices to SubF-Buy-Capital ; asking C-Firms let Selected-K-Firm first K-Firm-List ; auxiliar variable let Qtt Desired-Consumption / [Price] of Selected-K-Firm ; total number of consumption goods desired let expenses 0 ; auxiliar variable to update the deposit at bank later let new-inv 0 ; auxiliar variable to record the quantity of capital adquired by the C-Firm while [Qtt > 0 and empty? K-Firm-List = false] [ ask Selected-K-Firm [ ifelse [Stock] of Selected-K-Firm > Qtt [ ; if there is not available goods at the first firm ... set Demand Demand + Qtt ; update the demand of Selected-Firm set Stock Stock - Qtt ; updated the stock of the firm set Sales Sales + Qtt ; update the sales set Revenue Revenue + Price * Qtt ; update the revenue set Expenses Expenses + Price * Qtt ; update the auxiliar variable, used later to update the household bank account set new-inv new-inv + Qtt ; update the auxiliar variable to register the qtt consumed set Qtt 0 ; means no need to bought anymore ] [ ; second situation, buying only part at the first firm set Sales Sales + Stock ; update sales set Revenue Price * Stock + Revenue ; update revenue set expenses Price * Stock + Expenses ; update auxiliar variable, later used to update the bank account of the household set new-inv new-inv + Stock ; update stock set Qtt Qtt - Stock ; update auxiliar variable to register the Qtt consumed, Qtt = Qtt - S set Stock 0 ; update stock ] ] set K-Firm-List remove-item 0 K-Firm-List ; we remove the Firm with depleted Stock set Selected-K-Firm first K-Firm-List ; auxiliar variable ] set Investment new-inv ; update the Consumption of the households, the real value that the household did consume set Bank-Account-Firm Bank-Account-Firm - Expenses ; update the bank account of the households with the remaining money after the purchasing process end ; FUNCTION-UPDATE-PRODUCTION to Function-UpDate-Production ; this function update the production of Firms ask K-Firms [ ; updating the production of K-Firms (eqs 15, 17 & 18) set Production Number-of-Employees * Productivity-of-labor ; updating actual production set Stock Stock * (1 - Depreciation-of-capital-K) + Production ; updating stock, depreciation-of-capital is currently set at 2%, but K firms do not use capital so this is deterioration of unused stocks set Bank-Account-Firm Bank-Account-Firm + Revenue ; update bank account set Delta Production - Demand ; variable used to decide new production ifelse K-Qtt-Function? [ set Need-of-Employees Report-K-Update-Need-of-Employees ] ; if the switcher at HUD is turned on, you have a complex function below [ set Need-of-Employees Demand / Productivity-of-labor ] ; ... if the switcher at HUD is turned off, you have the easy way, and the demand determines the number of employees ifelse K-UpDate-Price? [ set Price Report-K-Update-Price ] ; if the switcher at HUD is turned on, you have a complex function below [ set Price Wage / Productivity-of-labor ] ; ... the switcher at HUD is turned off, you have the easy way ] ask C-Firms [ ; updating the production of C-Firms set Capital Capital - Capital * Util-Capacity * Depreciation-of-capital-C + Investment ; update the capital avalible for production process (eq 5.5 of Assenza, Gatti, Grazzini et al. 2015) set Production min list (Number-of-Employees * Productivity-of-labor) (Capital * Productivity-of-capital) ; update actual production limited by the available capital set Stock Production ; the C-Goods are perishable, so the actual stock are equal the production set Util-Capacity Production / (Capital * Productivity-of-capital) ; utilized capacity (eq 5.4 of Assenza, Gatti, Grazzini et al. 2015) set Bank-Account-Firm Bank-Account-Firm + Revenue ; update bank account set Delta Production - Demand ; variable used to decide new production level ifelse C-Qtt-Function? [ set Need-of-Employees Report-C-Update-Need-of-Employees ] ; if the switcher at HUD is turned on, you have a complex function below [ set Need-of-Employees Demand / Productivity-of-labor ] ; ... if the switcher at HUD is turned off, you have the easy way ifelse C-UpDate-Price? [ set Price Report-C-Update-Price ] ; if the switcher at HUD is turned on, you have a complex function below [ set Price Wage / Productivity-of-labor ] ; ... if the switcher at HUD is turned off, you have the easy way ] end to-report Report-C-Update-Price ; reporting the new price for C-Firms ... let N-P Price ; local auxiliar variable if (delta <= 0) and (Price < Goods-Price-Level) [ set N-P Price * (1 + random-float 1 * Price-adjust-parameter) ] ; rule to increase price, approaching it to that of the competitors... the jump is stochastic (eq 5.2 and fig.2 of Assenza, Gatti, Grazzini et al. 2015) if (delta > 0) and (Price > Goods-Price-Level) [ set N-P Price * (1 - random-float 1 * Price-adjust-parameter) ] ; rule to reduce price, approaching it to that of the competitors... the jump is stochastic (eq 5.2 and fig.2 of of Assenza, Gatti, Grazzini et al. 2015) report N-P ; report new price end to-report Report-K-Update-Price ; reporting the new price for K-firms let N-P Price ; local auxiliar variable if (delta <= 0) and (Price < Capital-Price-Level) [ set N-P Price * (1 + random-float 1 * Price-adjust-parameter ) ] ; rule to increase price, approaching it to that of the competitors... the jump is stochastic (eq 6.5 of Assenza, Gatti, Grazzini et al. 2015) if (delta > 0) and (Price > Capital-Price-Level) [ set N-P Price * (1 - random-float 1 * Price-adjust-parameter ) ] ; rule to reduce price, approaching it to that of the competitors... the jump is stochastic (eq 6.5 of Assenza, Gatti, Grazzini et al. 2015) report N-P ; report new price end to-report Report-C-Update-Need-of-Employees ; reporting new C-Firm needs for employees (eq 14) let N-E Number-of-Employees ; local auxiliar variable if (delta <= 0) and (Price >= Goods-Price-Level) [ set N-E ((Production - Quantity-adjust-parameter * delta) / productivity-of-labor) ] ; possible condition to increase actual number of employees and production (eq 5.1 and fig.2 of of Assenza, Gatti, Grazzini et al. 2015) if (delta > 0) and (Price < Goods-Price-Level) [ set N-E ((Production - Quantity-adjust-parameter * delta) / productivity-of-labor) ] ; other possible condition reduce actual number of employees and production (eq 5.1 and fig.2 of of Assenza, Gatti, Grazzini et al. 2015) report N-E ; report new desired employees end ; if (delta <= 0) and (Price < Goods-Price-Level) or the contrary the production does not change and the prices adjust to-report Report-K-Update-Need-of-Employees ; reporting new need for a C-firm employees let N-E Number-of-Employees ; local auxiliar variable if (delta <= 0) and (Price >= Capital-Price-Level) [ set N-E ((Production - Quantity-adjust-parameter * delta - Stock) / productivity-of-labor) ] ; possible condition to change actual number of employees and production, but we substract the stock (eq 6.6 of of Assenza, Gatti, Grazzini et al. 2015) if (delta > 0) and (Price < Capital-Price-Level) [ set N-E ((Production - Quantity-adjust-parameter * delta - Stock) / productivity-of-labor) ] ; other possible condition to change actual number of employees (eq 6.6 of of Assenza, Gatti, Grazzini et al. 2015) report N-E ; report new need for employees end ; UPDATE GLOBALS to Function-UpDate-Globals ; this function update the globals set Unemployment-Rate 1 - ((sum [Number-of-Employees] of Firms) / Number-of-Workers) ; update the unemployemnt rate set GDP_1 GDP ; store the previous value for the next period set GDP sum [Production] of Firms - sum [Stock] of K-Firms ; update the GDP, sum production - stocks if GDP < 0 [set GDP 1] ifelse GDP_1 > GDP [ set Recession-lenght Recession-lenght + 1 ; we define here a counter for recessions, to be used later ] [ set Recession-lenght 0 ; if there is no recession, the counter is set to zero ] if ticks > 1 [ set Growth-Rate (GDP - GDP_1) / GDP_1 ] if GDP_1 > GDP and Recession-lenght > 2 [ set QEasing? true ; QEasing means Quantitative Easing,and this is a policy that opens unlimited buying of Public Debt ] if GDP > GDP_1 or Recession-lenght = 0 [ set QEasing? false ; QEasing means Quantitative Easing,and this is a policy that opens unlimited buying of Public Debt ] set Total-Investment sum [Investment] of C-Firms ; update investment realized by the C-Firms set Total-Consumption sum [Consumption] of Households ; update the consumption set Total-Loans-Firms sum [Current-Retail-Loans] of Firms ; update the sum of retail loans, all firms set Total-Loans-C-Firms sum [Current-Retail-Loans] of C-Firms ; update the sum of retail loans for C-Firms set Total-Loans-K-Firms sum [Current-Retail-Loans] of K-Firms ; update the sum of retail loans for K-Firms set Total-Deposits-Workers sum [ Bank-Account-Household ] of Workers ; explicit set Total-Deposits-Capitalists sum [ Bank-Account-Household ] of Capitalists ; explicit set Total-Deposits-C-Firms sum [ Bank-Account-Firm ] of C-firms ; explicit set Total-Deposits-K-Firms sum [ Bank-Account-Firm ] of K-firms ; explicit set Total-Deposits_1 Total-Deposits ; explicit set Total-Deposits Total-Deposits-Workers + Total-Deposits-Capitalists + Total-Deposits-C-Firms + Total-Deposits-K-Firms ; explicit set Total-Interest-Payments sum [ Interest-Pay ] of Firms ; explicit set Total-Installment-Payments sum [ Installment-Pay ] of Firms ; explicit set Total-Reserves RR * Total-Deposits ; reserves of the banks deposited at the central bank set Goods-Price-Level_1 Goods-Price-Level ; store the Goods-Price-Level value for use with adaptative functions set Capital-Price-Level_1 Capital-Price-Level ; store the Capital-Price-Level value for use with adaptative functions if sum [Sales] of C-Firms != 0 [ set Goods-Price-Level sum [ Revenue ] of C-Firms / sum [Sales] of C-Firms ] ; update the goods price level if sum [Sales] of K-Firms != 0 [ set Capital-Price-Level sum [ Revenue ] of K-Firms / sum [Sales] of K-Firms ] ; update the capital price level set Current-Number-of-C-Firms count C-Firms ; current number of C-Firms set Current-Number-of-K-Firms count K-Firms ; current number of K-Firms set Current-Number-of-Workers count Workers ; current number of Workers end ; FUNCTION-CASH-FLOWS AND DIVIDENDS to Function-Cash-Flows-Dividends ; this function sets the payment of dividends and cash-flows adjustments ask C-Firms [ ; Cash flow of C-Firms set PBT Revenue + Bank-Account-Firm * eta3 - Number-of-Employees * Wage - Desired-Investment * Capital-Price-Level - (annuity-rate + eta0) * Current-Retail-Loans ; PBT is profits before taxes let div 0 ; auxiliar variable if Dividends-Payments? [ ; HUD control for activating dividends payments if PBT > 0 [ ; if the PBT is positive, the firm pay dividends and taxes set Profit PBT * (1 - tax2) ; the profit is reduced by a tax set State-Budget State-Budget + PBT * tax2 ; the State collects the taxes set Dividend Dividend-payout-ratio * Profit ; if there was a positive profit, setup dividend, the income of capitalists set Bank-Account-Firm Bank-Account-Firm - Dividend ; reduce the bank account the dividend which will be payed to the capitalist set Div Dividend ; auxiliar variable bring the div to the capitalist later ask one-of my-out-owners [ ; calling the owner of this firm, where my-out-calls "all links you can use to travel from this node" ask other-end [ ; at other end of the link is the capitalist set Current-Income div * (1 - tax1) ; update the current income, substracting the income taxes set Bank-Account-Household Bank-Account-Household + Current-Income ; update the household bank account of the capitalist set State-Budget State-Budget + div * tax1 ; the State collects the income taxes on this dividend ] ; end asking capitalist ] ; end asking link ] ; end PBT > 0 if PBT <= 0 [ ; if the profit is negative (losses) the problems appear set Profit PBT ; if the profit was zero or negative, the tax is zero ifelse Bank-Account-Firm >= abs Profit [ set Bank-Account-Firm Bank-Account-Firm - abs Profit ; the losses reduce the bank-account of the firm ] [ ; if the losses are larger than the bank-account of the firm a bakruptcy process starts set Overdraft abs Profit - Bank-Account-Firm ; overdraft are losses not covered by the money available at the bank account set Bank-Account-Firm 0 ; the losses deplete the bank account of the firm ask one-of my-out-owners [ ; calling the owner of this firm, where my-out-calls "all links you can use to travel from this node" ask other-end [ ; at other end of the link is the capitalist ifelse Bank-Account-Household >= Overdraft [ set Current-Income 0 ; update the current income of the capitalist set Bank-Account-Household Bank-Account-Household - Overdraft ; the capitalist of the firm has to recapitalize it using his own bank-account ] [ set Bankrupt? true SubF-Capitalist-Damnation ] ; end the overdraft and liquidation process ] ; end the negative profit process ] ; end the dividends distribution process ] ] ] ] ; end asking C-Firms ask K-Firms [ ; Cash flow of K-Firms set PBT Revenue + Bank-Account-Firm * eta3 - Number-of-Employees * Wage - (annuity-rate + eta0) * Current-Retail-Loans ; PBT is profits before taxes let div 0 ; auxiliar variable if Dividends-Payments? [ ; HUD control for activating dividends payments if PBT > 0 [ ; if the profit is positive, the firm pay dividends and taxes set Profit PBT * (1 - tax2) ; the profit is reduced by a tax set State-Budget State-Budget + PBT * tax2 ; the State collects the taxes set Dividend Dividend-payout-ratio * Profit ; if there was a positive profit, setup dividend, the income of capitalists set Bank-Account-Firm Bank-Account-Firm - Dividend ; reduce the bank account by the dividend which will be payed to the capitalist set div Dividend ; auxiliar variable bring the div to the capitalist later ask one-of my-out-owners [ ; calling the owner of this firm, where my-out-calls "all links you can use to travel from this node". ask other-end [ ; at other end of the link is the capitalist set Current-Income div * (1 - tax1) ; update the current income, substracting the income taxes set Bank-Account-Household Bank-Account-Household + Current-Income ; update the household bank account set State-Budget State-Budget + div * tax1 ; the State collects the taxes ] ] ] if PBT <= 0 [ ; if the profit before taxes is negative (losses) the problems appear set Profit PBT ; if the profit was zero or negative, the tax is zero ifelse Bank-Account-Firm >= abs Profit [ set Bank-Account-Firm Bank-Account-Firm - abs Profit ; the losses reduce the bank-account of the firms ] [ ; if the losses are larger than the bank-account of the firm set Overdraft abs Profit - Bank-Account-Firm ; overdraft are losses not covered by the money available at the Bank Accounts set Bank-Account-Firm 0 ; the losses deplete the bank-account of the firms ask one-of my-out-owners [ ; calling the owner of this firm, where my-out-calls "all links you can use to travel from this node". ask other-end [ ; at other end of the link is the capitalist let Unassumed-Losses Overdraft - Bank-Account-Household ; the losses not covered by the capitalist's money lead to the dismantlement of the firm if Unassumed-Losses <= 0 [ set Current-Income 0 ; update the current income of the capitalist set Bank-Account-Household Bank-Account-Household - Overdraft ; the capitalist of the firm has to recapitalize it using his own bank-account ] ; end of the procedure of heavy losses in which the capitalist is called for sustaining the firm if Unassumed-Losses > 0 [ set Bankrupt? true SubF-Capitalist-Damnation ] ; end procedure previous to bankruptcy ] ; end ask capitalist ] ; end ask one-of my-out-owners ] ; end the overdraft and liquidation process ] ; end the negative profit process ] ; end the dividends distribution process ] ; end asking K-Firms ask Banks [ ; Now lets see the cash flow of Banks let div 0 ; auxiliar variable set Clients-Accounts-C-Firms sum [ Bank-Account-Firm ] of out-banker-neighbors with [C-Firm? = true ] ; bank accounts of the C-Firms at a particular bank set Clients-Accounts-K-Firms sum [ Bank-Account-Firm ] of out-banker-neighbors with [C-Firm? = false] ; bank accounts of the K-Firms at a particular bank set Clients-Accounts-Firms Clients-Accounts-C-Firms + Clients-Accounts-K-Firms ; bank accounts of Firms at a particular bank set Clients-Accounts-Workers sum [ Bank-Account-Household ] of out-banker-neighbors with [Worker? = true ] ; bank accounts of the Workers at a particular bank set Clients-Accounts-Capitalists sum [ Bank-Account-Household ] of out-banker-neighbors with [Worker? = false] ; bank accounts of the Capitalists at a particular bank set Clients-Accounts-Households Clients-Accounts-Capitalists + Clients-Accounts-Workers ; bank accounts of the Households at a particular bank set Clients-Accounts-at-the-Bank_1 Clients-Accounts-at-the-Bank set Clients-Accounts-at-the-Bank Clients-Accounts-Firms + Clients-Accounts-Households ; total bank accounts of firms and households at a particular bank set Clients-Loans-C-Firms sum [ Current-Retail-Loans ] of out-banker-neighbors with [C-Firm? = true] ; loans to C-Firms of a particular bank set Clients-Loans-K-Firms sum [ Current-Retail-Loans ] of out-banker-neighbors with [C-Firm? = false] ; loans to K-Firms of a particular bank set Clients-Loans-with-the-Bank_1 Clients-Loans-with-the-Bank set Clients-Loans-with-the-Bank Clients-Loans-K-Firms + Clients-Loans-C-Firms ; total loans to Firms of a particular bank set Number-of-Firm-Clients count out-banker-neighbors with [shape = "factory"] ; total number of firm clients (with accounts or loans) with this bank set Number-of-Household-Clients count out-banker-neighbors with [shape = "person"] ; total number of household clients (with accounts) with this bank set Number-of-Clients Number-of-Firm-Clients + Number-of-Household-Clients ; total number of clients (any kind) with this bank set Shares Own-Bank-Capital / (Current-Number-of-C-Firms + Current-Number-of-K-Firms) ; the shares of the bank, one for every capitalist set I-Received sum [ Interest-Pay ] of out-banker-neighbors with [shape = "factory"] ; total interest payments of firms to a particular bank set D-Received sum [ Installment-Pay ] of out-banker-neighbors with [shape = "factory"] ; total installment payments of firms to a particular bank set Own-Reserves RR * Clients-Accounts-at-the-Bank ; reserves of the banks deposited at the central bank set PBT I-Received + Own-Reserves * eta4 - Central-Bank-Loans * (eta2 + annuity-rate) ; the profit income minus expenditures if Dividends-Payments? [ ; HUD control for activating dividends payments ifelse Profit > 0 [ ; if the profit is positive, the firm pay dividends and taxes set Profit PBT * (1 - tax2) ; the profit is reduced by a tax set State-budget State-budget + Profit * tax2 ; the State collects the taxes set Dividend Dividend-payout-ratio * Profit ; if there was a positive profit, setup dividend, the income of capitalists set Own-Bank-Capital Own-Bank-Capital + Profit * (1 - tax2) - Dividend ; reduce the bank account the dividend which will be paid to the capitalist set Div Dividend / (Current-Number-of-C-Firms + Current-Number-of-K-Firms) ; calculate dividend as part of the total profit divided by capitalists (everyone have a share) ask Capitalists [ ; call each of one of the capitalist let Number-of-Capitalists Current-Number-of-C-Firms + Current-Number-of-K-Firms ; total number of Capitalists set Current-Income Current-Income + div * (1 - tax1) ; increase the income of the capitalist with this new dividend set Bank-Account-Household Bank-Account-Household + div * (1 - tax1) ; update the bank account of the capitalist set State-Budget State-Budget + tax1 * div ; the State gets the income taxes ] ] [ ; if the profit is negative (losses) the problems start to show up ifelse Own-Bank-Capital >= abs Profit [ ; the bank has liquidity for compensating the loss set Own-Bank-Capital Own-Bank-Capital - abs Profit ; the losses reduce the Own-Bank-Capital of the bank ask Capitalists [ set Current-Income Current-Income + 0 ; update the current income of the capitalist, but we have to consider this is a secondary source of income for them ] ] [ ; if the losses are larger than the Own-Bank-Capital set Overdraft abs Profit - Own-Bank-Capital ; overdraft are the losses not covered by the Own-Bank-Capital set Own-Bank-Capital 0 ; the losses deplete the Own-Bank-Capital and then... ifelse Do_We_Have_State? [ ; untenable losses... if there exist a government and taxes... (we are asking banks) SubF-Call-Rescue-From-State ; ...the State goes to rescue the retail bank ] [ SubF-Go-Bankruptcy-Banks ; but if the State does not exist, the retail bank starts a bankruptcy process ] ] ; end procedure previous to bankruptcy ] ; end of the managing losses process ] ; end of dividends procedure for banks ] ; end of ask banks end to SubF-Capitalist-Damnation ask Capitalists with [Bankrupt? = true] [ set Current-Income 0 ; update the current income of the capitalist/owner set Bank-Account-Household Initial-households-personal-assets ; update the bank account of the capitalist/owner set Worker? true ; the capitalist becomes a worker... life is unfair set Employed? false ; this worker is unemployed at the start set color yellow ; now you are a worker and look like one set size 1.25 set Human-Wealth 1 set Desired-Consumption 0 set Consumption 0 set C-Firm-List [ ] ask in-owner-neighbors [ die ] ; and the former firm he/she owned vanishes set Current-Number-of-C-Firms Current-Number-of-C-Firms - 1 ; we correct the number of C-Firms in this economy ] ; end procedure previous to bankruptcy end to SubF-Call-Rescue-From-State if Do_We_Have_Central-Bank? = true and QEasing? = true [ ; if the Central Bank exists and it buys public debt without limits, all the deficit is converted to government bonds sold to the CB set State-Budget State-Budget - Initial-equity-of-the-bank - Overdraft ; in this case the government pays the recapitalization of the bank and the unpaid overdraft set Own-Bank-Capital Initial-equity-of-the-bank set Profit 0 ] if State-Budget >= (Initial-equity-of-the-bank + Overdraft) and Do_We_Have_Central-Bank? = false [ ; if the Central Bank does not exist, the State helps the bank only if the budget has enough resources set State-Budget State-Budget - Initial-equity-of-the-bank - Overdraft ; in this case the government pays the recapitalization of the bank and the unpaid overdraft set Own-Bank-Capital Initial-equity-of-the-bank set Profit 0 ] if State-Budget >= (Initial-equity-of-the-bank + Overdraft) and Do_We_Have_Central-Bank? = true and QEasing? = false [ ; if the Central Bank exists but the Quantitative Easing policy is not activated, the State helps the bank only if the budget has enough resources set State-Budget State-Budget - Initial-equity-of-the-bank - Overdraft ; in this case the government pays the recapitalization of the bank and the unpaid overdraft set Own-Bank-Capital Initial-equity-of-the-bank set Profit 0 ] if State-Budget <= (Initial-equity-of-the-bank + Overdraft) and Do_We_Have_Central-Bank? = false [ ; if the Central Bank does not exist and the State budget has not enough resources... SubF-Go-Bankruptcy-Banks ; ... the bankruptcy process is started ] if State-Budget <= (Initial-equity-of-the-bank + Overdraft) and Do_We_Have_Central-Bank? = true and QEasing? = false [ ; if the Central Bank exists but the Quantitative Easing policy is not activated and the State budget hasn't enough resources... SubF-Go-Bankruptcy-Banks ; ... the bankruptcy process is started ] end to SubF-Go-Bankruptcy-Banks ; this subfunction rules the process for the Bank bankruptcy and rebuilding using capitalits' resources. We ask banks here. set B-Broke B-Broke + 1 ; increase the global parameter that counts the broke status let Original-Shares Initial-equity-of-the-bank / (Current-Number-of-C-Firms + Current-Number-of-K-Firms) ; the original price of a share, before any serious problem appears let Bank-Owners Capitalists with [Bank-Account-Household >= Original-Shares] ; this implies a bail-in, because the capitalits will be forced to buy again one share let Broken-Capitalists Capitalists with [Bank-Account-Household < Original-Shares] ; excluded capitalists are those unable to restitute their share in the banking sector, and their number is adjusted below let New-Shares Original-Shares ; we prepare this instrumental variable for repeated use later let New-Shares_1 0 ; we prepare this instrumental variable for repeated use later while [New-Shares > New-Shares_1] [ set New-Shares_1 New-Shares set New-Shares Initial-equity-of-the-bank / (count Bank-Owners) ; the capitalists unable to afford a new share are excluded, but as a consecuence, the price per share increases set Bank-Owners Capitalists with [Bank-Account-Household >= New-Shares] ; this implies a bail-in set Broken-Capitalists Capitalists with [Bank-Account-Household < New-Shares] ; broken capitalists are unable to restitute their share in the banking sector, and they will lose their "capitalist" status ] ask Bank-Owners [ set Bank-Account-Household Bank-Account-Household - New-Shares ; update the bank account of the capitalist, reducing the account due to the money used to rebuild the bank ] ask Broken-Capitalists [ ; the capitalists unable to pay for the bail-in will be broken set Bank-Account-Household 0 ; the capitalist unable to pay for the new shares get broken set Worker? true ; the capitalist is broken, and he/she becomes a poor worker set Number-of-Workers Number-of-Workers + 1 set color yellow ; just for fun, not necessary for the model, used only for display in HUD netlogo set Human-Wealth 1 ; initial value for Human Wealth, utilized to calculate the consumption process set Current-Income 0 ; intitial income set Bank-Account-Household Initial-households-personal-assets ; initial value of deposits at the banks, a vital minimum set Desired-Consumption 0 ; initial value for desire Consumption set Consumption 0 ; initial value for Consumption set C-Firm-List [ ] ; setup for the list which will be used to colect the C-Firms visited set Employed? false ; the ex-capitalist is now an unemployed worker and he has to look for an employment... life is hard... ask one-of my-in-owners [ ; we identify the firm (K or C) previously owned by the broken capitalist... my-in-breed means "all links that you can use to travel to this node". ask end1 [ set Owner? false ] ; ...the firm at the other end of the link now is deprived of a proper owner die ; the link representing ownership dies, the problem now is looking for a new owner for that orphan firm... ] ] let Newcapitalist n-of 1 Workers with-max [ Bank-Account-Household ] ; ...the orphan C-Firm or K-Firm needs one new owner, so we ask the worker with the highest savings to buy the Firm and become a capitalist ask Newcapitalist [ ; before we proceed to transform a worker into a capitalist, we broke his/her current labor contract with a (different) firm ask one-of my-in-hireds [ ; the only link of this worker, future capitalist, is the labor contract ask other-end [ ; we contact with the firm for which this worker is employed set Vacancy Vacancy + 1 ; the worker leaves, so the firm adjust the vacancies adding an open job to the record set Number-of-Employees Number-of-Employees - 1 ; the firm losses one worker, which now is a capitalist unwilling to work ] die ; the link, the labor contract, dies or disappear ] set shape "person" ; the metamorphosis of this person is compplete now... he comes to a new (better) life... set size 1.25 ; just for fun, not necessary for the model, used only for display in HUD Netlogo set color white ; he becomes white as well, the color of wealthy capitalists set Worker? false ; false only means he/she is now a happy capitalist set Number-of-Workers Number-of-Workers - 1 create-owner-from one-of Firms with [Owner? = false] [set hidden? true] ; this command creates a link between the orphan firm and the new capitalist and in this way one will know each other for all the purposes ask out-owner-neighbors [ set Owner? true ] ; we identify the (C or K) firm previously owned by the broken capitalist and now owned by the lucky new capitalist... ] end ; FUNCTION-CREDIT-MARKET: CREDIT AND BANKRUPTCY PROCEDURES to Function-Credit-Market ; this function rules the credit market system SubF-Call-Matrix-Formation ; function to set the matrix used in R to calculate the life spam of firms set C-Broke 0 ; global variable for counting the total number of C-firms that went broke this period set K-Broke 0 ; global variable for counting the total number of K-firms that went broke this period set Total-Clients-Accounts sum [ Clients-Accounts-at-the-Bank ] of Banks ; this should be equal to Total-Deposits set Total-Client-Loans sum [ Clients-Loans-with-the-Bank ] of Banks ; this should be equal to Total-Loans-Firms ask Firms [ ; firms update their status with the retail bank SubF-Update-Installment ; to update the installment SubF-Update-Cash-Need ; to update firm cash need SubF-Update-Assets ; to update assets value SubF-Update-Leverage ; to update the leverage, all this is used to rule interest rate practiced later ] ask C-Firms [ SubF-Ask-for-C-Credit ; checks if this C-firm needs credit, it will be asked in this subfunction ] ask K-firms [ SubF-Ask-for-K-Credit ; checks if this K-Firm needs credit, it will be asked in this subfunction ] ask Banks [ ; the retail bank update the balance after the new was created if Do_We_Have_Central-Bank? [ SubF-Ask-for-Credit-to-Central-Bank ; the retail bank asks for credits to the Central Bank if reserves fall bellow the prescribed level ] set Assets max list 0 (Own-Reserves + Clients-Loans-C-Firms + Clients-Loans-K-Firms + Own-Bank-Capital) set Liabilities max list 0 (Clients-Accounts-Workers + Clients-Accounts-Capitalists + Clients-Accounts-C-Firms + Clients-Accounts-K-Firms + Central-Bank-Loans) set Bank-Equity Assets - Liabilities ] set Total-Central-Bank-Loans sum [Central-Bank-Loans] of Banks ; global variable that calculates the sum of all Central-Bank-Loans to retail banks if C-Broke-Procedure? [ ; switch check if the user want the broke procedure ask C-Firms [ ; this rules is for C-firm broke if (Cases-of-Bankruptcy > T-Ban) [ ; check if this firm did not pay their debts with a bank, where T-Ban (= 1, 2 o 4) are the Firm's number of periods unable to make payments before going to bankrupcy SubF-Go-Bankruptcy-C-Firms ; subfunction containing the bankruptcy process ] ] ] if K-Broke-Procedure? [ ; the same as the C-firm, check above for details ask K-Firms [ if (Cases-of-Bankruptcy > T-Ban) [ ; check if this firm did not pay their debts with a bank, where T-Ban (= 1, 2 o 4) are the Firm's number of periods unable to make payments before going to bankrupcy SubF-Go-Bankruptcy-K-Firms ; subfunction containing the bankruptcy process ] ] ] end to SubF-Call-Matrix-formation ; subfunction that manage the R routines ask C-Firms [ set Matrix-C-Firms-Bankruptcy matrix:set-and-report Matrix-C-Firms-Bankruptcy 1 Mjc Leverage ; update the second row of the matrix with information about C-Firms: every (1, Mjc) element is replaced by Leverage ifelse (Cases-of-Bankruptcy < T-Ban) ; update a position with 0 if the firm is alive, and 1 if the firm went bankrupt [ set Matrix-C-Firms-Bankruptcy matrix:set-and-report Matrix-C-Firms-Bankruptcy 0 Mjc 0 ] ; 0 is the first row, 1 the second row, etc. Mjc is the columns [ set Matrix-C-Firms-Bankruptcy matrix:set-and-report Matrix-C-Firms-Bankruptcy 0 Mjc 1 ] ; 0 is the first row, 1 the second row, etc. Mjc is the columns set Mjc Mjc + 1 if Mjc > (Time-Window1 - 1) [ set Mjc 0 ] ; move the matrix element to the next position, so the replacements in the matrix are sequential, and the time-window controls how many observations we'll have ] ask K-Firms [ set Matrix-K-Firms-Bankruptcy matrix:set-and-report Matrix-K-Firms-Bankruptcy 1 Mjk Leverage ; update the matrix with information about the K-firms ifelse (Cases-of-Bankruptcy < T-Ban) ; update a position with 0 if the firm is alive, and 1 if the firm went bankruptcy [ set Matrix-K-Firms-Bankruptcy matrix:set-and-report Matrix-K-Firms-Bankruptcy 0 Mjk 0 ] [ set Matrix-K-Firms-Bankruptcy matrix:set-and-report Matrix-K-Firms-Bankruptcy 0 Mjk 1 ] set Mjk Mjk + 1 if Mjk > (Time-Window1 - 1) [ set Mjk 0 ] ; move the matrix the next position, and the time-window controls how many observations we'll have ] let A matrix:get-row Matrix-C-Firms-Bankruptcy 0 ; create an object with the first row of the matrix, which contains 0s and 1s, if barkrupt or not let B matrix:get-row Matrix-C-Firms-Bankruptcy 1 ; create an object with the second row of the matrix, which contains the Leverage for every C-Firm r:put "a" A ; call the R and put there the object A r:put "b" B ; call the R and put there the object B r:eval "c <- glm(a ~ b, family = binomial)" ; call R and ask to solve the logistic function with the inputs A and B, gls stands for "generalized linear model", and binomial implies logit link between "a" and "b" let C r:get "c$coefficients" ; call R and the coefficients into object C set Beta_1-C-Firms first C ; save the beta-1 for C-firms if Beta_1-C-Firms < (- 25) [set Beta_1-C-Firms (- 25)] ; assure value into a meaninful range, because the first period there is not enough information set Beta_2-C-Firms last C ; save the beta-2 for C-firms if (Beta_2-C-Firms > 0) = false [ set Beta_2-C-Firms 0 ] ; assure value into a meaninful range, because the first period there is not enough information if Beta_2-C-Firms > 25 [ set Beta_2-C-Firms 25 ] ; assure value into a meaninful range, because the first period there is not enough information set A matrix:get-row Matrix-K-Firms-Bankruptcy 0 ; create an object with the first row of the matrix, which contains 0s and 1s, if barkrupt or not set B matrix:get-row Matrix-K-Firms-Bankruptcy 1 ; create an object with the seccond row of the matrix, which contains the Leverage for every K-Firm r:put "a" A ; call the R and put there the object A r:put "b" B ; call the R and put there the object B r:eval "c <- glm(a ~ b, family = binomial)" ; call R and ask to solve the logistic function with the inputs A and B, gls stands for "generalized linear model", and binomial implies logit link between "a" and "b" set C r:get "c$coefficients" ; the same as for the C-Firms, look above for details set Beta_1-K-Firms first C if Beta_1-K-Firms < (- 25) [ set Beta_1-K-Firms (- 25) ] set Beta_2-K-Firms last C if (Beta_2-K-Firms > 0) = false [ set Beta_2-K-Firms 0 ] if Beta_2-K-firms > 25 [ set Beta_2-K-Firms 25 ] end ; SUBFUNCTIONS FOR UPDATING THE SYSTEM STATE to SubF-Update-Installment ; this subfunction update the installment debt with retail banks (we are asking Firms) set Interest-Pay 0 ; reset parameter set Installment-Pay 0 ; reset parameter, the repayment schedule if Current-Retail-Loans > 0 [ ; check if exist loan ifelse Bank-Account-Firm >= ((annuity-rate + eta0) * Current-Retail-Loans) [ ; check if there is money enough to pay the debts set Interest-Pay eta0 * Current-Retail-Loans ; update the parameter with the value will be payed set Bank-Account-Firm Bank-Account-Firm - interest-pay ; update parameter set Installment-Pay annuity-rate * Current-Retail-Loans ; update parameter set Bank-Account-Firm Bank-Account-Firm - Installment-Pay ; update parameter set Current-Retail-Loans Current-Retail-Loans - Installment-Pay ; update parameter set Cases-of-Bankruptcy 0 ; as the firm pay debts this period, reset the parameter for bankruptcy ] [ set Cases-of-Bankruptcy Cases-of-Bankruptcy + 1 ; if the firm did not had money she will be closer and closer to bankruptcy ] ; bankruptcy happens when the firm is unable to pay its debt to the bank ] end to SubF-Update-Cash-Need ; subfuntion used for updating the need for cash (loans) before production takes place (need for liquidity)... (we are asking Firms) ifelse C-Firm? [ set Need-Cash max list 0 (Need-Cash + Number-of-Employees * Wage + Desired-Investment * Capital-Price-Level + (annuity-rate + eta0) * Current-Retail-Loans - Bank-Account-Firm) ] [ set Need-Cash max list 0 (Need-Cash + Number-of-Employees * Wage + (annuity-rate + eta0) * Current-Retail-Loans - Bank-Account-Firm) ] end to SubF-Update-Assets ; subfunction to update the assets, which differ from C-Firm to K-Firm type (we are asking Firms) ifelse C-Firm? [ set Assets max list 0 (Stock * Price + Bank-Account-Firm + Capital * Capital-Price-Level) set Liabilities max list 0 (Current-Retail-Loans) set Equity-C-Firms Assets - Liabilities ] [ set Assets max list 0 (Stock * Price + Bank-Account-Firm) set Liabilities max list 0 (Current-Retail-Loans) set Equity-K-Firms Assets - Liabilities ] end to SubF-Update-Leverage ; updating the leverage of a firm (we are asking Firms) if Need-Cash > 0 [ set Leverage (Current-Retail-Loans + Need-Cash) / (Assets + Current-Retail-Loans + Need-Cash) ] if (Current-Retail-Loans = 0) [ set Leverage 0 ] end ; CREDIT PROCESS to SubF-Ask-for-C-Credit ; this subfunction is called when there is need for a loan, we ask C-Firms ; how much money the nearest bank may offer as a loan, see eq. 8.11 in Assenza, Gatti, Grazzini et al. 2015 let Available-Credit-Assenza1 (Bank-loss-parameter * ([Bank-Equity] of My-Nearest-Bank - Probability-of-Bankruptcy * [Clients-Loans-with-the-Bank] of My-Nearest-Bank)) / Probability-of-Bankruptcy ; how much money the nearest bank may offer as a loan, see eq. 27 of Elder Silva's document let Available-Credit-Assenza2 Bank-loss-parameter * ([Bank-Equity] of My-Nearest-Bank * B-Lev * Risk - [Clients-Loans-with-the-Bank] of My-Nearest-Bank) set Available-Credit-Assenza min (list Available-Credit-Assenza1 Available-Credit-Assenza2) let Available-Credit Available-Credit-Assenza if (Need-Cash > 0) and ([Available-Credit-Basel] of My-Nearest-Bank > 0) and (Available-Credit >= Need-Cash) and (Cases-of-Bankruptcy < T-Ban) [ ; check if the need of a firm is lower then the available credit set Current-Retail-Loans Current-Retail-Loans + Need-Cash ; updating the loans parameter set Bank-Account-Firm Bank-Account-Firm + Need-Cash ; updating the bank account with the money received ask My-Nearest-Bank [ set Available-Credit-Basel Available-Credit-Basel - Need-Cash ] set Need-Cash 0 ] if (Need-Cash > 0) and ([Available-Credit-Basel] of My-Nearest-Bank > 0) and (Available-Credit < Need-Cash) and (Cases-of-Bankruptcy < T-Ban) [ ; check if the need of a firm is lower then the available credit set Current-Retail-Loans Current-Retail-Loans + Available-Credit ; the nearest bank offer a loan up to the limit set Bank-Account-Firm Bank-Account-Firm + Available-Credit ; updating the bank account with the money received ask My-Nearest-Bank [ set Available-Credit-Basel Available-Credit-Basel - Available-Credit ] set Need-Cash Need-Cash - Available-Credit ] ifelse Update-Interest? [ SubF-Update-Interest-Retail-C ] [ set eta0 taylor-interest-rate ] ; call a subfunction to update the interest rate of this firm end to SubF-Update-Interest-Retail-C ; update the interest rate of a C-firm set Probability-of-Bankruptcy (1 / (1 + e ^ ( - Beta_1-C-Firms - (Beta_2-C-Firms * leverage)))) ; save the probability of dying of this C-Firm, and for the Betas see above set T-expected (1 / Probability-of-Bankruptcy) ; calculate the life expectation of this firm (eq 24) let Numerator (1 + (taylor-interest-rate / annuity-rate)) ; local auxiliar variable, first part to calculate the new interest rate let Denominator ((1 - (1 - annuity-rate) ^ (T-expected + 1)) / annuity-rate) ; // // second part of the new interest rate let new-int Bank-gross-mark-up * ((numerator / denominator) - annuity-rate) ; calculating the new interest rate (eq 26 or 8.8 in Assenza, Gatti, Grazzini et al. 2015) set eta0 (eta0 * (Current-Retail-Loans - Need-Cash) + new-int * Need-Cash) / Current-Retail-Loans ; update the interest rate as mean of the new and the later interest rate end to SubF-Ask-for-K-Credit ; this subfunction is called when there is need for a loan, C-Firm type ; how much money the nearest bank may offer as a loan, see eq. 8.11 in Assenza, Gatti, Grazzini et al. 2015 let Available-Credit-Assenza1 (Bank-loss-parameter * ([Bank-Equity] of My-Nearest-Bank - Probability-of-Bankruptcy * [Clients-Loans-with-the-Bank] of My-Nearest-Bank)) / Probability-of-Bankruptcy ; how much money the nearest bank may offer as a loan, see eq. 27 of Elder Silva's document let Available-Credit-Assenza2 Bank-loss-parameter * ([Bank-Equity] of My-Nearest-Bank * B-Lev * Risk - [Clients-Loans-with-the-Bank] of My-Nearest-Bank) set Available-Credit-Assenza min (list Available-Credit-Assenza1 Available-Credit-Assenza2) let Available-Credit Available-Credit-Assenza if (Need-Cash > 0) and ([Available-Credit-Basel] of My-Nearest-Bank > 0) and (Available-Credit >= Need-Cash) and (Cases-of-Bankruptcy < T-Ban) [ ; check if the need of a firm is lower then the available credit set Current-Retail-Loans Current-Retail-Loans + Need-Cash ; updating the loans parameter set Bank-Account-Firm Bank-Account-Firm + Need-Cash ; updating the bank account with the money received ask My-Nearest-Bank [ set Available-Credit-Basel Available-Credit-Basel - Need-Cash ] set Need-Cash 0 ] if (Need-Cash > 0) and ([Available-Credit-Basel] of My-Nearest-Bank > 0) and (Available-Credit < Need-Cash) and (Cases-of-Bankruptcy < T-Ban) [ ; check if the need of a firm is lower then the available credit set Current-Retail-Loans Current-Retail-Loans + Available-Credit ; the nearest bank offer a loan up to the limit set Bank-Account-Firm Bank-Account-Firm + Available-Credit ; updating the bank account with the money received ask My-Nearest-Bank [ set Available-Credit-Basel Available-Credit-Basel - Available-Credit ] set Need-Cash Need-Cash - Available-Credit ] ifelse Update-Interest? [ SubF-Update-Interest-Retail-K ] [ set eta0 taylor-interest-rate ] ; call a subfunction to update the interest rate of this firm end to SubF-Update-Interest-Retail-K ; update the interest rate of a K-firm set Probability-of-Bankruptcy (1 / (1 + e ^ ( - Beta_1-K-Firms - (Beta_2-K-Firms * leverage)))) ; save the probability of dying of this K-Firm, and for the Betas see above set T-expected (1 / Probability-of-Bankruptcy) ; calculate the life expectation of this firm (eq 24) let Numerator (1 + (taylor-interest-rate / annuity-rate)) let Denominator ((1 - (1 - annuity-rate) ^ (T-expected + 1)) / annuity-rate) let new-int Bank-gross-mark-up * ((numerator / denominator) - annuity-rate) ; calculating the new interest rate (eq 26 or 8.9 in Assenza, Gatti, Grazzini et al. 2015) set eta0 (eta0 * (Current-Retail-Loans - Need-Cash) + new-int * Need-Cash) / Current-Retail-Loans end to SubF-Go-Bankruptcy-C-Firms ; this subfunction rules the process for the C-firm bankruptcy set C-Broke C-Broke + 1 ; increase the global parameter which count the broke status set Cases-of-Bankruptcy 0 ; reset the parameter ask out-owner-neighbors [ ; find out who is the owner of this firm ifelse Bank-Account-Household >= Initial-liquidity-of-Firms [ ; if the owner has enough money for paying the initial capital of the new firm set Bank-Account-Household Bank-Account-Household - Initial-liquidity-of-Firms ; update the bank account of the capitalist, reduce the money used to rebuild the firm ask in-owner-neighbors [ ; the owner asks the firm to reset the following variables set Current-Retail-Loans 0 ; reset the parameter if Capital-Destruction? [ set Capital Initial-Capital ] ; reset the capital of the C-Firm, the input applied to the production of C goods set Bank-Account-Firm Initial-liquidity-of-Firms ; updated the bank account with the money from the capitalist ] ] [ ; if the owner does not have enough money for paying the initial capital of the firm with problems... set Bank-Account-Household 0 ; ...the owner pay the debts with all his/her current assets set Worker? true ; the capitalist is broken, and he/she becomes a poor worker set Number-of-Workers Number-of-Workers + 1 set color yellow ; just for fun, not necessary for the model, used only for display in HUD netlogo set Human-Wealth 1 ; initial value for Human Wealth, utilized to calculate the consumption process set Current-Income 0 ; intitial income set Bank-Account-Household Initial-households-personal-assets ; initial value of deposits at the banks, a vital minimum set Desired-Consumption 0 ; initial value for desire consume set Consumption 0 ; initial value for Consumption set C-Firm-List [ ] ; setup for the list which will be used to colect the C-Firms visited set Employed? false ; this worker is unemployed for the moment ask in-owner-neighbors [ ; the owner asks the firm to reset the following variables set Current-Retail-Loans 0 ; reset the parameter... in fact this is unnecesary because the firm will die soon... die ; ... I warned you about it... the C-Firm dies, and all its links set Number-of-C-Firms Number-of-C-Firms - 1 ] ] ] ; end asking the owner end to SubF-Go-Bankruptcy-K-Firms ; this subfunction rules the process for the K-firm bankruptcy set K-Broke K-Broke + 1 ; increase the global parameter which count the broke status set Cases-of-Bankruptcy 0 ; reset the parameter ask out-owner-neighbors [ ; find out who is the owner of this firm... there is only one ifelse Bank-Account-Household >= Initial-liquidity-of-Firms [ ; if the owner has enough money for paying the initial capital of the new firm set Bank-Account-Household Bank-Account-Household - Initial-liquidity-of-Firms ; update the bank account of the capitalist, reduce the money used to rebuild the firm ask in-owner-neighbors [ ; the owner asks the firm to reset these variables set Current-Retail-Loans 0 ; reset the parameter set Bank-Account-Firm Initial-liquidity-of-Firms ; updated the bank account with the money from the capitalist ] ] [ ; if the owner does not have enough money for paying the initial capital of the firm with problems... set Bank-Account-Household 0 ; ...the owner pay the debts with all his/her current assets set Worker? true ; the capitalist is broken, and he/she becomes a poor worker set Number-of-Workers Number-of-Workers + 1 set color yellow ; just for fun, not necessary for the model, used only for display in HUD netlogo set Human-Wealth 1 ; initial value for Human Wealth, utilized to calculate the consumption process set Current-Income 0 ; intitial income set Bank-Account-Household Initial-households-personal-assets ; initial value of deposits at the banks, a vital minimum set Desired-Consumption 0 ; initial value for desire Consumption set Consumption 0 ; initial value for Consumption set C-Firm-List [ ] ; setup for the list which will be used to colect the C-Firms visited set Employed? false ; this worker is unemployed for the moment ask in-owner-neighbors [ ; the owner asks the firm to reset these variables set Current-Retail-Loans 0 ; reset the parameter... in fact this is unnecesary because the K-Firm will die soon... die ; ... I warned you about it... the K-Firm dies, and all its links set Current-Number-of-K-Firms Current-Number-of-K-Firms - 1 ] ] ] ; end asking the owner end to SubF-Ask-for-Credit-to-Central-Bank ; this subfunction is called when the retail bank needs for a loan due to liquidity problems if Own-Reserves / Clients-Accounts-at-the-Bank_1 < RR [ let Needed-Liquidity Clients-Accounts-at-the-Bank_1 * RR - Own-Reserves set Central-Bank-Loans Central-Bank-Loans + Needed-Liquidity ] end ; FUNCTION-CENTRAL-BANK: SETTING INTEREST RATE AND CONDITIONS FOR THE LOANS TO THE RETAIL BANKS to Function-Central-Bank SubF-Set-Interest-Rates ; different interest rates are calculated by the central bank SubF-Set-Macroprudential-Rules ; a set of macroprudential rules included in the Basel III catalogue end to SubF-Set-Interest-Rates set Total-Loans_1 Total-Loans set Total-Loans Total-Loans-Firms + Total-Central-Bank-Loans set inflation_1 inflation ; store the inflation value for use with adaptative functions set inflation ((ln Goods-Price-Level - ln Goods-Price-Level_1) + (ln Capital-Price-Level - ln Capital-Price-Level_1)) ; this approximation with logarithms is good only if the rate is close to zero set P_GDP Productivity-of-labor * Number-of-Workers ; P_GDP is potential GDP, and this is the maximum production, by using all resources (Unemployment = 0) let sensity_inflation Taylor-rule-parameter-for-inflation * (inflation - desired-inflation) ; Taylor-rule-parameter-for-inflation & Desire-inflation-for-the-monetary-authority let sensity_product Taylor-rule-parameter-for-product * (ln GDP - ln P_GDP) ; Taylor-rule-parameter-for-product let sensity_credit Taylor-rule-parameter-for-credit * (ln Total-Loans - ln Total-Loans_1) ; the parameter for the credit component of the Taylor rule if taylor-rule = "conservative" [ set taylor-interest-rate max list 0.01 ( (inflation + natural-interest-rate + sensity_inflation) * (Slow_taylor) + (1 - slow_taylor) * taylor-interest-rate ) ; conservative Taylor rule: inflation (eq 18 of Popoyan et al) ] if taylor-rule = "dual-mandate" [ set taylor-interest-rate max list 0.01 ( (inflation + natural-interest-rate + sensity_inflation + sensity_product) * (Slow_taylor) + (1 - slow_taylor) * taylor-interest-rate ) ; dual mandate Taylor rule: inflation and output gap (eq 30 of Silva or eq 19 of Popoyan et al) ] if taylor-rule = "three-mandate" [ set taylor-interest-rate max list 0.01 ( (inflation + natural-interest-rate + sensity_inflation + sensity_product + sensity_credit) * (Slow_taylor) + (1 - slow_taylor) * taylor-interest-rate ) ; three-mandate Taylor rule: inflation, output gap and credit (eq 20 of Popoyan et al) ] end to SubF-Set-Macroprudential-Rules ; we follow here Popoyan et al (2017), pp. 120-121 and 125-127 ; First, we prepare the global variables needed below set Credit-on-GDP_1 Credit-on-GDP ; we store the value of the previous period set Credit-on-GDP Total-Loans-Firms / GDP ; this is the basic ratio used in the Counter-Cyclical-Capital-Buffer defined in Basel III rules let Credit-on-GDP_bis Total-Client-Loans / GDP ; this is a different way for the same result, and we should see Credit-on-GDP = Credit-on-GDP_bis set Matrix-Basel-Buffer matrix:set-and-report Matrix-Basel-Buffer 0 Mjb Credit-on-GDP ; update the first row of the matrix with information about the explained variable: every (0, Mjb) element is replaced by Credit-on-GDP of the current period set Matrix-Basel-Buffer matrix:set-and-report Matrix-Basel-Buffer 1 Mjb ticks ; update the second row of the matrix with information about the explicative variable: every (1, Mjb) element is replaced by Credit-on-GDP of the previous period set Mjb Mjb + 1 if Mjb > (Time-Window2 - 1) [ set Mjb 0 ] ; move the matrix element to the next position, so the replacements in the matrix are sequential, and the time-window controls how many observations we'll have let A matrix:get-row Matrix-Basel-Buffer 0 ; create an object with the first row (0) of the matrix, which contains current Credit-on-GDP let B matrix:get-row Matrix-Basel-Buffer 1 ; create an object with the second row (1) of the matrix, which contains Credit-on-GDP of the previous period r:put "a" A ; call R and put there the object A r:put "b" B ; call R and put there the object B r:eval "c <- lm(a ~ b)" ; call R and ask to solve the OLS regression with the inputs A and B, lm stands for "linear model". The OLS regression is Credit-on-GDP = a + b * ticks + e let C r:get "c$fitted.values" ; call R and put the fitted values into an object C, which is a list let long-Run-Credit-on-GDP last C ; save the last fitted value as a new variable used in the calculation of the gap set Credit-on-GDP-Gap Credit-on-GDP - long-Run-Credit-on-GDP ; we create the gap variable here... and then we proceeed to the calculation of the capital buffer ; Now we start with the definition of the macroprudential rules and their implications for the available credit of banks ask Banks [ ; this is important because the rules are applied to a macro scale but also to a micro scale, for every bank if Macroprudential-Rules = "basel2" [ ; we have created a chooser called "macroprudential-rules" with several possibilities: basel2, basel31, basel32, basel312 set Available-Credit-Basel2 max (list 0 (Own-Bank-Capital * 12.5 - Clients-Loans-with-the-Bank)) ; available-credit = Own-Bank-Capital * 12.5 - Total-Loans-Firms, the maximum limit minus the current level of loans let Minimum-Capital-Requirement-Basel2 Own-Bank-Capital / (Clients-Loans-with-the-Bank + available-credit-basel2) ; Basel II sets this ratio as 8% as a minimum set Available-Credit-Basel Available-Credit-Basel2 ; Available-Credit-Assenza are the particular constraints of the bank to new loans, and it is combined with Available-Credit-Basel determined by monetary authorities ] if Macroprudential-Rules = "basel3_1" [ let Available-Credit-Basel31a max (list 0 (Own-Bank-Capital * 22.2 - Clients-Loans-with-the-Bank)) ; available-credit = Own-Bank-Capital * 22.2 - Total-Loans-Firms, the maximum limit minus the current level of loans let Minimum-Capital-Requirement-Basel3 Own-Bank-Capital / (Clients-Loans-with-the-Bank + Available-Credit-Basel31a) ; Basel II sets this ratio as 4,5% as a minimum let Available-Credit-Basel31b 0 set Capital-Buffer 0 let Buffer-Add-On 0 if Credit-on-GDP-Gap < 2 [ set Capital-Buffer 0 ; there is no buffer here, and therefore there are no specific constraits on new available-credits. The capital Buffer is a percentage on Total-Loans-Firms. set Buffer-Add-On 0 ; the Capital Buffer is a % of the Total-Loans-Firms not available for firms, this is, for each $ loaned this % must be reserved as a buffer... ] ; end of first case if Credit-on-GDP-Gap <= 10 and Credit-on-GDP-Gap >= 2 [ set Capital-Buffer max (list 0 ((Credit-on-GDP-Gap - 2) * 0.003125)) ; 0.003125 = 0.025 / 8 and from here we have a range of values for the Capital-Buffer... (Total-Loans-Firms + Available-Credit-Basel32) set Available-Credit-Basel31b (Clients-Accounts-at-the-Bank + Own-Bank-Capital + Central-Bank-Loans - Own-Reserves - Clients-Loans-with-the-Bank - Clients-Loans-with-the-Bank * Capital-Buffer) / (1 + Capital-Buffer) ; Deposits-Total includes Own-Bank-Capital set Buffer-Add-On Capital-Buffer * (Clients-Loans-with-the-Bank + Available-Credit-Basel31b) ; the aggregate constraint is (Deposits-Total + Central-Bank-Loans + Own-Capital-Bank - Reserves - Total-Loans-Firms - Buffer-Add-On) = Available-Credit-Basel31b ] ; and aggregate Buffer-Add-On = Capital-Buffer * (Total-Loans-Firms + Available-Credit-Basel31)... if Credit-on-GDP-Gap > 10 [ set Capital-Buffer 0.025 set Available-Credit-Basel31b max (list 0 ((Clients-Accounts-at-the-Bank + Own-Bank-Capital + Central-Bank-Loans - Own-Reserves - Clients-Loans-with-the-Bank - Clients-Loans-with-the-Bank * Capital-Buffer) / (1 + Capital-Buffer))) ; Deposits-Total includes Own-Bank-Capital set Buffer-Add-On Capital-Buffer * (Clients-Loans-with-the-Bank + Available-Credit-Basel31b) ; the aggregate constraint is (Deposits-Total + Total-Central-Bank-Loans + sum (Own-Capital-Bank) - Reserves - Total-Loans-Firms - Buffer-Add-On) = Available-Credit-Basel31b ] ; end of third case let Leverage-Requirement-Basel3 Own-Bank-Capital / Assets ; this is the third ratio of the first macroprudential rule of Basel III, and the ratio has to be equal to or higher than 3% let Available-Credit-Basel31c max (list 0 ((Own-Bank-Capital - 0.03 * Assets) / 0.03)) ; 0.03 = Own-Bank-Capital / (Assets of Banks + Available-Credit-Basel31c) and therefore... set Available-Credit-Basel31 min (list Available-Credit-Basel31a Available-Credit-Basel31b Available-Credit-Basel31c) set Available-Credit-Basel Available-Credit-Basel31 ] if Macroprudential-Rules = "basel3_2" [ let High-Quality-Liquid-Assets (Own-Reserves + Own-Bank-Capital) * 1.75 set Available-Credit-Basel32 (High-Quality-Liquid-Assets - (taylor-interest-rate + annuity-rate) * Central-Bank-Loans - 0.1 * Clients-Accounts-at-the-Bank - 0.25 * Central-Bank-Loans + I-Received + D-Received - 0.5 * Clients-Loans-with-the-Bank) * 2 let Expected-Net-Cash-Outflows (taylor-interest-rate + annuity-rate) * Central-Bank-Loans + 0.1 * Clients-Accounts-at-the-Bank + 0.25 * Central-Bank-Loans - I-Received - D-Received + 0.5 * (Clients-Loans-with-the-Bank + Available-Credit-Basel32) let Liquidity-Coverage-Ratio High-Quality-Liquid-Assets / Expected-Net-Cash-Outflows ; Liquidity-Coverage-Ratio >= 1 set Available-Credit-Basel Available-Credit-Basel32 ] if Macroprudential-Rules = "basel3_12" [ set Available-Credit-Basel min (list Available-Credit-Basel31 Available-Credit-Basel32) ] ] end ; FUNCTION-CALL-STATE to Function-State-Manage-Budget ; the State get taxes, sells PublicDebt to the Central Bank if there is a deficit and buys PublicDebt to the Central Bank if there is a superavit and pays unemployment benefits set State-Budget State-Budget - PublicDebt * (taylor-interest-rate * annuity-rate) ; the unemploymet benefits was substracted from the State Budget when the State paid for it let State-Budget-Balance State-Budget ; we record the budget balance let State-Budget-Balance_1 State-Budget-Balance ; we store the surplus or deficit of this period if State-Budget-Balance < 0 and Do_We_Have_Central-Bank? = true and QEasing? = true [ ; if the Central Bank exists and it buys public debt without limits, all the deficit is converted to government bonds sold to the CB set PublicDebt PublicDebt + abs State-Budget ; new debt is added to the existing set State-Budget 0 ; when the deficit is covered, the State budget is in equilibrium ] ; if the Quantitative Easing is not activated the State Budget cannot be negative (we might consider a constraint of 3% of deficit instead of 0%) if State-Budget-Balance > 0 and PublicDebt > 0 and PublicDebt >= State-Budget-Balance and Do_We_Have_Central-Bank? = true [ ; if the Central Bank exists and there is a surplus... set PublicDebt PublicDebt - State-Budget ; new debt is added to the existing set State-Budget 0 ; when the deficit is covered, the State budget is in equilibrium ] ; end of this case if State-Budget-Balance > 0 and PublicDebt >= 0 and PublicDebt < State-Budget-Balance and Do_We_Have_Central-Bank? = true [ ; if the Central Bank exists and there is a surplus... set State-Budget State-Budget-Balance - PublicDebt ; new debt is added to the existing set PublicDebt 0 ; the public debt is cancelled set Account-of-State-at-Central-Bank Account-of-State-at-Central-Bank + State-Budget ; the surplus goes to the account of the State at the Central Bank, and this reduces the amount of money in the system set State-Budget 0 ; when the surplus is applied, the State budget is in equilibrium ] ; end of this case end to Function-Update-System SubF-Update-Wages SubF-Update-Monetary-Variables SubF-Entry-New-Firms end To SubF-Update-Wages ; this subfunction adjusts wages depending on unempleyment rate, and this wage is applied to the next period set cpi_1 cpi ; store the cpi value for use with adaptative functions... it is a global variable set cpi ln Goods-Price-Level - ln Goods-Price-Level_1 ; cpi is the consumer prince index, user for indexing salaries set Wage-on-GDP_1 Wage-on-GDP ; store the Wage-on-GDP value for use with adaptative functions set Wage-on-GDP (sum [Number-of-Employees] of Firms * Wage) / GDP ; total salaries as a percentage of the GDP, then Wage = (Wage-on-GDP * GDP) / Number-of-Employees is the wage that keeps that proportion constant set Wage_1 Wage ; store the Wage value for use with adaptative functions ifelse Unemployment-Rate <= frictional-unemployment-rate + 3 [ ; if the unemployment rate approaches the frictional unemployment rate (of about 5%), then trade unions get stronger and wages rise set Wage min list ((1 + cpi_1) * Wage) ((Wage-on-GDP_1 * GDP) / sum [Number-of-Employees] of Firms) ; two options: the previous wage increased by the consumer price index or the wage which keeps Wage-on-GDP constant ] [ ; the second option for wage comes from finding the value of wage in (Wage-on-GDP_1 = Wage-on-GDP) set Wage minimum-wage ; if the unemployment rate is higher than the frictional unemployment rate plus a margin, the wages cannot be lower than a legal minimum ] ; trade unions try to keep purchasing power of salaries or weight of salaries on GDP constant, but they loss power if unemployment increases end to SubF-Update-Monetary-Variables set Monetary-Base Total-Central-Bank-Loans + PublicDebt - Account-of-State-at-Central-Bank - Central-Bank-Own-Capital ; monetary base is "outside money", and that difference is "coins and bills" money set Currency Monetary-Base - Total-Reserves ; Currency is Currency, and this plus Total-Reserves is the Monetary-Base set Money-Supply Monetary-Base / RR ; Monetary-Base multiplied by the money multiplier (1/RR) is the Money-Supply end to SubF-Entry-New-Firms ; if bakruptcy of firms occurs, a procedure for regenerating firms is activated let C-Firms-newcomers% 0 ; local variable, a probability following a Beta distribution ifelse GDP > GDP_1 [ set C-Firms-newcomers% stats:beta 6 3 ] [ set C-Firms-newcomers% stats:beta 3 6 ] ; the probability of new firms depends on the GDP growth, and the Beta distribution is asymmetrical if Number-of-C-Firms > Current-Number-of-C-Firms [ ; if the number of C-Firms is lower than the maximun, there is room for newcomers if random-float 1 < C-Firms-newcomers% [ ; with a probability that depends on the GDP growth, new C-Firms appear in the economy create-firms 1 [ move-to one-of patches with [not any? Firms-here] ; if a C-Firm and K-Firm are at the same patch, move the new firm in the setup process set shape "factory" ; just for fun, not necessary for the model, used only for display in HUD netlogo set size 2 ; just for fun, not necessary for the model, used only for display in HUD netlogo set color orange ; just for fun, not necessary for the model, used only for display in HUD netlogo set C-Firm? true ; proper of the Firms, true means it is a consumption producer firm set Owner? false ; this firm will have an owner, but at this moment does not have it set Price random-float 2 ; initial value for price set Capital Initial-capital ; initial value for capital set Stock Initial-production-C-firms ; initial value for stock set Production Initial-production-C-firms ; initial value for production set Revenue 0 ; initial value for revenue set Sales 0 ; initial value for sales set Need-Cash 0 ; initial value for cash needed before production, because lack of liquidity for starting it set Cases-of-Bankruptcy 0 ; the total number of bankruptcies by this firm set Desired-Investment 0 ; initial value for desire investment set Investment 0 ; initial value for investment set Number-of-Employees 0 ; initial value for number of employees set Need-of-Employees 0 ; initial value for desire employees set K-Firm-List [ ] ; setup for the list which will be used to colect the K-Firms visited set Vacancy 0 ; initial value for vacancy set Bank-Account-Firm Initial-liquidity-of-Firms ; initial money deposited at the bank by the firms set Investment-Memory Initial-Capital ; initial value for Investment-Memory, parameter utilized to calculate the desire investment set Util-Capacity 0 ; initial value for util-capacity create-banker-from min-one-of banks [distance myself] [set hidden? true] ; this create a link between the bank and the capitalist set My-Nearest-Bank min-one-of banks [distance myself] ; this bank is the same to which the C-Firms is now linked with a "banker" relationship ] ; end new firm commands ] ; end if random 100 ] ; end condition about room for new firms let Newcapitalist-C n-of 1 Workers with-max [ Bank-Account-Household ] ; the new firm needs a new capitalist-owner ask Newcapitalist-C [ ; we ask the worker with the highest savings to buy the Firm and become a capitalist ask one-of my-in-hireds [ ; the new capitalist is a worker yet and we take its labor contract and... ask other-end [ ; ... at the other end of that contract is a firm set Vacancy Vacancy + 1 ; the worker leaves, so the firm adjust the vacancies set Number-of-Employees Number-of-Employees - 1 ; the firm losses one worker ] die ; the link, the labor relationship, dies ] set shape "person" ; this is unnecessary, because the worker also has a person shape set size 1.25 ; the same goes for the size set color white ; the color changes, because workers are yellow and capitalists are white set Worker? false ; he/she is now a capitalist set Current-Number-of-Workers Current-Number-of-Workers - 1 create-owner-from one-of Firms with [Owner? = false] [set hidden? true] ; this creates a link between the firm and the capitalist ] ; local variable with the total number of K-Firms alive in this period let K-Firms-newcomers% 0 ; local variable, a probability following a Beta distribution ifelse GDP > GDP_1 [ set K-Firms-newcomers% stats:beta 6 3 ] [ set K-Firms-newcomers% stats:beta 3 6 ] ; the probability of new firms appearing depends on the GDP growth, and the Beta distribution is asymmetrical if Number-of-K-Firms > Current-Number-of-K-Firms [ ; if the number of K-Firms is lower than the maximun, there is room for newcomers if random-float 1 < K-Firms-newcomers% [ ; with a probability that depends on the GDP growth, new K-Firms appear in the economy create-firms 1 [ move-to one-of patches with [not any? Firms-here] ; if a C-Firm and K-Firm are at the same patch, move the K-Firm in the setup process set shape "factory" ; just for fun, not necessary for the model, used only for display in HUD netlogo set size 2 ; just for fun, not necessary for the model, used only for display in HUD netlogo set color green ; just for fun, not necessary for the model, used only for display in HUD netlogo set C-Firm? false ; proper of the Firms, true means it is a consumption producer firm set Owner? false ; this firm will have an owner, but at this moment does not have it set Price random-float 2 ; initial value for price set Capital Initial-capital ; initial value for capital set Stock Initial-production-K-firms ; initial value for stock set Production Initial-production-K-firms ; initial value for production set Revenue 0 ; initial value for revenue set Sales 0 ; initial value for sales set Need-Cash 0 ; initial value for cash needed before production, because lack of liquidity for starting it set Cases-of-Bankruptcy 0 ; the total number of bankruptcies by this firm set Desired-Investment 0 ; initial value for desire investment set Investment 0 ; initial value for investment set Number-of-Employees 0 ; initial value for number of employees set Need-of-Employees 0 ; initial value for desire employees set Vacancy 0 ; initial value for vacancy set Bank-Account-Firm Initial-liquidity-of-Firms ; initial money deposited at the bank by the firms set Investment-Memory Initial-Capital ; initial value for Investment-Memory, parameter utilized to calculate the desire investment set Util-Capacity 0 ; initial value for util-capacity create-banker-from min-one-of banks [distance myself] [set hidden? true] ; this create a link between the bank and the capitalist set My-Nearest-Bank min-one-of banks [distance myself] ; this bank is the same to which the C-Firms is now linked with a "banker" relationship ] ; end sprout ] ; end if random 100 ] ; end condition about room for new firms let Newcapitalist-K n-of 1 Workers with-max [ Bank-Account-Household ] ; the new firm needs a new capitalist-owner ask Newcapitalist-K [ ; we ask the worker with the highest savings to buy the Firm and become a capitalist ask one-of my-in-hireds [ ; the new capitalist is a worker yet and we take its labor contract ask other-end [ ; at the other end of that contract is a firm set Vacancy Vacancy + 1 ; the worker leaves, so the firm adjust the vacancies set Number-of-Employees Number-of-Employees - 1 ; the firm losses one worker ] die ; the link, the labor relationship, dies ] set shape "person" ; this is unnecessary, because the worker also has a person shape set size 1.25 ; the same goes for the size set color white ; the color changes, because workers are yellow and capitalists are white set Worker? false ; he/she is now a capitalist set Current-Number-of-Workers Current-Number-of-Workers - 1 create-owner-from one-of Firms with [Owner? = false] [set hidden? true] ; this create a link between the firm and the capitalist ] end
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Rubén Osuna
This model is a beta version!
The model has undetected problems and it does not run yet.
Posted over 7 years ago
Rubén Osuna
Version 2 now runs
The version 2 runs, but the behaviour of the model is not the expected yet.
Posted over 7 years ago