Research & Work in Progress

Work in Progress:

Riddles and waves of economic growth and wealth concentration driven by non-productive assets (with Grassetti, F.)

AbstractThis paper presents a non-linear dynamic macroeconomic model to analyze the interactions between economic growth and wealth concentration driven by both productive capital and non-productive capital assets. In summary, we show that: i) Equilibrium occurs only if the return on the non-productive asset is negative. In such a case, if saving for productive capital is low, then there are fluctuations and riddles, however, developing economies always converge towards equilibrium, while developed economies may or may not converge but do not fluctuate, and underdeveloped economies may converge or not converge, but they also present fluctuations when savings allocated to productive capital are too high. ii) In the event that the return on non-productive assets is positive (most probable case), then if the savings allocated to productive capital are low, the (developed, developing, and underdeveloped) economies always converge towards a poverty trap. We further show that if capitalists invest in non-productive assets, strong inequalities exist in all economies, but these inequalities are even greater in developing economies. Inequality is reduced only when the share invested in the non-productive asset is very close to zero, but if a little (even 0.2) is invested in this type of asset, then the inequality between workers and capitalists is immediately very large.Keywords: Behavioral macroeconomics, Economic Growth, Poverty Traps’ Stability.

The hierarchical evolutionary game: Economic growth vs Traps (with Gubar, A., Gerschuk, T., and Owen, L. )

AbstractWe propose an evolutionary hierarchical game model applied to behavioral macroeconomics. Our model proposal considers two levels of hierarchy, a first-level hierarchy made up of lead-level hierarchy ers that we call Children. We affirm that as a second-level hierfirst level (Pararchy of the gaments), the playee made up in thers of the second level (Children) access ``thresholds or signals'' to make decisions in their game. Thus, we show the imitative and dynamic evolution of a structural economy in hierarchies that can converge towards one state or another characterized by high- or low-profile economic agents or a mixture of these. Hence, the course of the economy towards stationary states of economic growth, or the opposite, or mixtures. The economy dynamically evolve towards stationary states of high levels of economic performance, with high-profile actors (educated, trained, investors, collaborators, benefactors, foreign preferences, etc.) or, on the contrary, develop a lutionarily stable economy characterized by poor economic performance made up of low-skilled players, low levels of investment, and generally known as the steady state of the poverty trap. We show the threshold values and the cases of bifurcations to overcome one equilibrium or another, and thus make the economy converge to the desirable stationary state.

On the Stressful Interaction of Monetary and Fiscal Targets: An Evolutionary Game Approach (with Ille, S., and Thanh Nguyen, D.)

AbstractIn this paper, we study the strategic dynamic rationales of monetary and fiscal interactions with policy stress driven by economic performance issues related to inflation, public debt, and government transfer payments to households. Our model proposal reveals some main findings. Basically, the analysis shows that the combination of monetary expansion and fiscal contraction cannot be a Nash equilibrium and is therefore not evolutionarily stable. Therefore, an expansionary monetary policy cannot be the best response to a contractionary fiscal policy, and vice versa. The results of evolutionary dynamics show that there are multiple regimes in which the interaction between fiscal and monetary policies presents monetary dominance, fiscal dominance, and a switching regime. Especially, the regime change region characterizes two pure Nash equilibria and one mixed Nash that corresponds to the separator or threshold and deficit value between the two.The coordination of monetary and fiscal policies towards either an expansionary or contractionary regime driven by inflation targeting

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