The 2007-09 financial crisis pointed out the central role of public and private debt in modern economies. In this seminar. we show how debt is a crucial determinant of economic dynamics by means of the agent-based macro-model Eurace1. Eurace is a fully-specified agent-based model of a complete economy that includes different types of agents and integrates different types of markets. Agents include households which act as consumers, workers and financial investors, consumption goods producers as well as capital goods producers, banks, a government and a central bank. Agents interact in different types of markets, namely markets for consumption goods and capital goods, a housing market, a labor market, a credit market and a financial market for stocks and government bonds. A fundamental contribution of the Eurace model has been to shed light on the interplay among real economic variables, such as gross domestic product, unemployment rate and aggregate capital stock, and the dynamics of credit, determined by banking regulation on capital adequacy ratios; this dependence is in place due to the credit channel and varies significantly according to the chosen evaluation horizon. In general, regulations allowing for a high leverage of the banking system tend to inflate real estate bubbles and boost the economy in the short run, while result in bubble bursts and economic crises and depression in the medium and long run.
Marco Raberto received the Laurea degree in physics and the Doctoral degree in electronics and computer science engineering.
He is an Associate Professor of Business and Management Engineering at the Faculty of Engineering, University of Genoa.
He is author of more than 50 scientific contributions in books and journals on the topics of agent-based modelling in economics and finance, financial stability and financial time series.