Andrea Roventini

• PhD
• Professor (Associate) at Sant'Anna School of Advanced Studies

This Element is about agent-based macroeconomics in general, and in particular about a family of evolutionary, agent-based models (ABMs), which are called 'Schumpeter meeting Keynes' (or K+S). The K+S models knit together 'Schumpeterian' endogenous processes of innovation with 'Keynesian' mechanisms of demand generation. As with all well-constructe...

A large number of countries have by now pledged to undertake policies aimed at reducing greenhouse gas emissions and achieving carbon neutrality in the coming decades. However, evidence on the suitable policy package to induce an effective and orderly transition is scarce. Recent studies suggest that abrupt and aggressive climate policy may induce...

This work reconstructs novel series on income distribution in Italy combining survey data, tax data and National Accounts both at the national and regional levels, and it analyzes the overall progressivity of the tax system. Our new Distributional National Accounts allow to correct for remarkable misreporting of capital income in surveys, to provid...

The fourth book in the ‘European Public Investment Outlook’ series focuses on the urgent issue of how to finance needed investment in critical tangible and intangible infrastructure given high levels of public debt, a thorny problem facing many governments across Europe. Drawing on expertise from academics, researchers at public policy institutes a...

Defense R&D represents the largest component of US public R&D spending and historically has promoted a wide range of civilian innovations. However, the empirical evidence on the impact of defense R&D is scant and it does not provide conclusive results on the possible crowding-in (-out) effects on private R&D investment. Exploiting a longitudinal da...

We evaluate the exposure of Italian regions to employment and the health risk associated with the spread of COVID-19. First, we estimate the degree of participation of Italian regions in a plurality of value chains linked to consumption, investment and exports. Second, we investigate the different levels of contagion risk associated with each value...

This paper presents an agent-based model (ABM) of endogenous arrival of technological paradigms and new sectors entailing different patterns of labour creation and destruction, as well as of consumption dynamics. The model, building on the labour-augmented K+S ABM, addresses the long-term patterns of labour demand emerging from heterogeneous forms...

By 2050 about 70% of the world’s population is expected to live in cities. Cities offer spatial economic advantages that boost agglomeration forces and innovation, fostering further concentration of economic activities. For historic reasons urban centers cluster along coasts, which are prone to climate-induced flooding and sea level rise. To explor...

Climate anomalies, such as floods and droughts, as well as gradual temperature changes have been shown to adversely affect economies and societies. Although studies find that climate change might increase global inequality by widening disparities across countries, its effects on within-country income distribution have been little investigated, as h...

We employ an agent-based model to shed light on the macroeconomic effects of accounting principles, unconventional monetary policies, and of their possible interactions. If mark-to-market accounting standards may entail positive feedbacks which amplify economic or financial shocks, unconventional policies may introduce negative feedbacks that might...

We build a novel interregional computational input–output model to assess the economic impact of lockdowns in Italy. Lockdowns are modeled as shocks to labor supply, calibrated on regional and sectoral employment data coupled with the prescriptions of government decrees. When estimated on data from the first lockdown, our model closely reproduces t...

This work reconstructs novel series on income distribution in Italy combining survey data, tax data and National Accounts both at the national and regional levels, and it analyzes the overall progressivity of the tax system. Our new Distributional National Accounts allow to correct for remarkable misreporting of capital income in surveys, to provid...

By 2050 about 80% of the world’s population is expected to live in cities. Cities offer spatial economic advantages that create agglomeration forces and innovation that foster concentration of economic activities, but for historic reasons cluster along coasts and rivers that are prone to climate-driven flooding. To explore tradeoffs between agglome...

This work presents an original proposal for the reform of the Eurozone architecture according to an approach based on risk sharing (aiming to reach in the long-term the mutualization of public debt). The proposal envisages a new role for the European Stability Mechanism (ESM) which should gradually become the guarantor of the public debts of the Eu...

In this work, we evaluate the exposure of Italian regions to the risk associated with the spread of COVID-19 through a two-step value chain approach. First, we estimate the degree of participation of Italian regions in a plurality of value chains linked to consumption, investment and exports. We distinguish between value chains aimed at satisfying...

Which policies can increase the resilience of the financial system to climate risks? Recent evidence on the significant impacts of climate change and natural disasters on firms, banks and other financial institutions call for a prompt policy response. In this paper, we employ a macro-financial agentbased model to study the interaction between clima...

The unprecedented lockdown measures implemented by many countries in the wake of the COVID-19 pandemic have created a need for tools to assess their economic costs. For this purpose, we present a novel dynamic input-output modelling framework which we apply to an estimation of the economic impact of lockdowns in Italy. Lockdown measures are treated...

This article presents an Agent-Based Model (ABM) that seeks to explain the concordance of sluggish growth of productivity and of real wages found in macroeconomic statistics, and the increased dispersion of firm productivity and worker earnings found in micro level statistics in advanced economies at the turn of the 21st century. It shows that a si...

In this article, we study the effects of industrial policies on international convergence using a multicountry agent-based model which builds upon Dosi et al. (2019b, J. Econ. Dyn. Control, 101, 101–129). The model features a group of microfounded economies, with evolving industries, populated by heterogeneous firms that compete in international ma...

The COVID-19 lockdowns have brought about the need of large fiscal responses in all European countries. However, countries across Europe are differently equipped to respond to the shock due to differences in economic conditions and fiscal space. We build on the model by Berger et al. (2019) to compare gains from alternative mechanisms of EU fiscal...

This paper extends the endogenous growth agent-based model in Fagiolo and Dosi (Struct Change Econ Dyn 14(3):237–273, 2003) to study the finance–growth nexus. We explore industries where firms produce a homogeneous good using existing technologies, perform R&D activities to introduce new techniques, and imitate the most productive practices. Unlike...

We develop a macroeconomic agent-based model to study how financial instability can emerge from the co-evolution of interbank and credit markets and the policy responses to mitigate its impact on the real economy. The model is populated by heterogenous firms, consumers, and banks that locally interact in different markets. In particular, banks prov...

In this work we discuss the research findings from the labour-augmented Schumpeter meeting Keynes (K + S) agent-based model. It comprises comparative dynamics experiments on an artificial economy populated by heterogeneous, interacting agents, as workers, firms, banks and the government. The exercises are characterized by different degrees of labou...

In this paper we employ an agent-based integrated assessment model to study the likelihood of transition to green, sustainable growth in presence of climate damages. The model comprises heterogeneous fossil-fuel and renewable plants, capital- and consumption-good firms and a climate box linking greenhouse gasses emission to temperature dynamics and...

We analyze the individual and macroeconomic impacts of heterogeneous expectations and action rules within an agent‐based model populated by heterogeneous, interacting firms. Agents have to cope with a complex evolving economy characterized by deep uncertainty resulting from technical change, imperfect information, coordination hurdles, and structur...

Recent evidence suggests that climate change will significantly affect economic growth and several productive elements of modern economies, such as workers and land1,2,3,4. Although historical records indicate that economic shocks might lead to financial instability, few studies have focused on the impact of climate change on the financial actors5,...

Climate change has increased the frequency and intensity of natural disasters. Does this translate into increased economic damages? To date, empirical assessments of damage trends have been inconclusive. Our study demonstrates a temporal increase in extreme damages, after controlling for a number of factors. We analyze event-level data using quanti...

In response to our paper, ‘ECB monetary expansions and euro area TARGET2 imbalances: a balance-of-payment-based decomposition,’ Professor Andrea Terzi has criticized our approach of TARGET2 balance decomposition, by highlighting a lack of causality between balance-of-payments (BP) flows and TARGET2 net balances. Proving a strong causality link was...

The assessment of the socio-economic and financial impacts of climate change represents a main source of uncertainty for policy makers and investors. However, traditional climate economics and financial risk models are not properly equipped to consider the characteristics of climate risks and the opportunities from climate-alignment, being constrai...

The debate about the impact of technology on employment has always had a central role in economic theory. At the same time, the nexus of technological progress and employment might depend on macroeconomic regimes. In this work we investigate the interrelations among technology, output and employment in the U.S. economy in growth recessions vs. grow...

We develop a macroeconomic agent-based model to study how financial instability can emerge from the co-evolution of interbank and credit markets and the policy responses to mitigate its impact on the real economy. The model is populated by heterogenous firms, consumers, and banks that locally interact in different markets. In particular, banks prov...

Since the survey by Windrum et al. (Journal of Artificial Societies and Social Simulation 10:8, 2007), research on empirical validation of agent-based models in economics has made substantial advances, thanks to a constant flow of high-quality contributions. This Chapter attempts to take stock of such recent literature to offer an updated critical...

While investments into renewable energy technologies are growing almost everywhere, the chances to meet ambitious emission and climate targets, as those envisaged in the Paris Agreement, are scant. To speed up the transition, policy makers need to design and implement a policy mix that could affect not just the quantity of green finance, but its qu...

Understanding the complex, dynamic, and non-linear relationships between human activities, the environment and the evolution of the climate is pivotal for policy design and requires appropriate tools. Despite the existence of different attempts to link the economy (or parts of it) to the evolution of the climate, results have often been disappointi...

In this work we study the granular origins of business cycles and their possible underlying drivers. As shown by Gabaix (Econometrica 79:733–772, 2011), the skewed nature of firm size distributions implies that idiosyncratic (and independent) firm-level shocks may account for a significant portion of aggregate volatility. Yet, we question the origi...

This work nests the Agent-Based macroeconomic perspective into the earlier history of macroeconomics. We discuss how the discipline in the 70’s took a perverse path relying on models grounded on fictitious rational representative agent in order to try to pathetically circumvent aggregation and coordination problems. The Great Recession was a natura...

The paper compares the effects of market-based (M-B) and command-and-control (C&C) climate policies on the direction of technical change and the prevention of environmental disasters. Drawing on a model of endogenous growth and directed technical change, we show that M-B policies (carbon taxes and subsidies toward clean sectors) suffer from path de...

In this paper we present a multi-country, multi-industry agent-based model investigating the different growth patterns of interdependent economies. Each country features a Schumpeterian engine of endogenous technical change which interacts with Keyneasian/Kaldorian demand generation mechanisms. National trajectories are driven by firms’ accumulatio...

Climate change is posing daunting challenges to our societies. Such challenges are increasingly recognized by policymakers, practitioners and academics. Indeed, to limit the negative impact of human activities on the climate, 193 governments signed, in December 2015, the “Paris Agreement” aimed at stabilizing global temperature on 2 °C above pre-in...

In this work we develop a set of labour market and fiscal policy experiments upon the labour- and credit- augmented “Schumpeter meeting Keynes” agent-based model. The labour market is declined under two institutional variants, the “Fordist” and the “Competitive” set-ups meant to capture the historical transition from the post-WWII toward the post T...

In this work we develop an agent-based model where hysteresis in major macroeconomic variables (e.g., gross domestic product, productivity, unemployment) emerges out of the decentralized interactions of heterogeneous firms and workers. Building upon the “Schumpeter meeting Keynes” family of models (cf. in particular Dosi et al. (2016b, 2017c)), we...

This work analyses the effects of labour market structural reforms by means of the labour-augmented 'Schumpeter meeting Keynes' (K+S) Agent-Based model. We introduce a policy regime change characterized by a set of structural reforms on the labour market. Confirming a recent IMF report, the model shows how structural reforms reducing workers' barga...

The recent financial literature seems to have reached a consensus about the influence of European Central Bank (ECB) unconventional monetary policies in explaining the multiple divergent trends of TARGET2 (T2) balances in the eurozone from 2010 and the ensuing segregation of risks in each national economy. According to the ECB, ‘mechanical’ effects...

The recent financial literature seems to have reached a consensus about the influence of European Central Bank (ECB) unconventional monetary policies in explaining the multiple divergent trends of TARGET2 (T2) balances in the eurozone from 2010 and the ensuing segregation of risks in each national economy. According to the ECB, ‘mechanical’ effects...

In this paper, we investigate the causal effects of public and private debts on US output dynamics. We estimate a battery of Cointegrated Structural Vector Autoregressive models, and we identify structural shocks by employing Independent Component Analysis, a data-driven technique which avoids ad-hoc identification choices. The econometric results...

In this work we develop an agent-based model that offers an alternative to standard, computable general equilibrium integrated assessment models (IAMs). The Dystopian Schumpeter meeting Keynes (DSK) model is composed of heterogeneous firms belonging to capital-good, consumption-good and energy sectors. Production and energy generation lead to green...

In this work we discuss the research findings from the labour-augmented Schumpeter meeting Keynes (K + S) agent-based model. It comprises comparative dynamics experiments on an artificial economy populated by heterogeneous, interacting agents, as workers, firms, banks and the government. The exercises are characterized by different degrees of labou...

The authors build a simple agent-based model populated by households with heterogenousand time-varying financial conditions in order to study how fiscal multipliers can changeover the business cycle and are affected by the state of credit markets. They find thatdeficit-spending fiscal policy dampens the effect of bankruptcy shocks and lowers theirp...

This paper extends the endogenous-growth agent-based model in Fagiolo and Dosi (2003) to study the finance-growth nexus. We explore industries where firms produce a homogeneous good using existing technologies, perform R&D activities to introduce new techniques, and imitate the most productive practices. Unlike the original model, we assume that bo...

In this work, we discuss how the rich academic milieu left by different Italian political economy traditions after WWII paved the way for the development of a new generation of macroeconomic agent-based models. The K + S (Dosi et al. in J Econ Dyn Control 34:1748–1767, 2010; Dosi et al. in J Evol Econ. https://doi.org/10.1007/s00191-016-0466-4, 201...

We build an agent-based model populated by households with heterogenous and time-varying financial conditions in order to study how different inequality shocks affect income dynamics and the effects of different types of fiscal policy responses. We show that inequality shocks generate persistent falls in aggregate income by increasing the fraction...

We develop an agent-based model in which heterogeneous firms and households interact in labor and good markets according to centralized or decentralized search and matching protocols. As the model has a deterministic backbone and a full-employment equilibrium, it can be directly compared to Dynamic Stochastic General Equilibrium (DSGE) models. We s...

Climate change is one of the most daunting challenges human kind has ever faced. In the paper, we provide a survey of the micro and macro economics of climate change from a complexity science perspective and we discuss the challenges ahead for this line of research. We identify four areas of the literature where complex system models have already p...

Taking agent-based models (ABM) closer to the data is an open challenge. This paper explicitly tackles parameter space exploration and calibration of ABMs combining supervised machine-learning and intelligent sampling to build a surrogate meta-model. The proposed approach provides a fast and accurate approximation of model behaviour, dramatically r...

Taking agent-based models (ABM) closer to the data is an open challenge. This paper explicitly tackles parameter space exploration and calibration of ABMs combining supervised machine-learning and intelligent sampling to build a surrogate meta-model. The proposed approach provides a fast and accurate approximation of model behaviour, dramatically r...

Europe can move towards an inclusive, sustainable and innovation-friendly growth-path as long as it renews its economic policy agenda. ISIGrowth research points to two key messages: First, the mono-directional supply-side policy attitude – based on fiscal austerity plus labour market structural reforms – has not worked and it should leave the groun...

Wages are an element of cost crucially affecting the competitiveness of individual firms. But the wage bill is also a crucial element of aggregate demand. Hence it could be that more “flexible” and “fluid” labour markets, while allowing for faster inter-firm reallocation of labour, may also render the whole economic system more fragile, more prone...

This paper presents the family of the Keynes+Schumpeter (K+S, cf. Dosi et al, J Econ Dyn Control 34 1748–1767 2010, J Econ Dyn Control 37 1598–1625 2013, J Econ Dyn Control 52 166–189 2015) evolutionary agent-based models, which study the effects of a rich ensemble of innovation, industrial dynamics and macroeconomic policies on the long-term growt...

The Great Recession seems to be a natural experiment for economic analysis, in that it has shown the inadequacy of the predominant theoretical framework — the New Neoclassical Synthesis (NNS) — grounded on the DSGE model. In this paper, we present a critical discussion of the theoretical, empirical and political-economy pitfalls of the DSGE-based a...

We develop an agent-based model to study the macroeconomic impact of alternative macro prudential regulations and their possible interactions with different monetary policy rules. The aim is to shed light on the most appropriate policy mix to achieve the resilience of the banking sector and foster macroeconomic stability. Simulation results show th...

This note briefly examines the path that the economics discipline has taken since adopting the assumption that human behaviour is exclusively driven by utility maximisation. This view has prevented the full comprehension of most economic phenomena and has spread to other social disciplines, occasionally leading to results either ridiculous or tragi...