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SELECTED PUBLICATIONS

Fostering green investments and tackling climate-related financial risks: which role for macroprudential policies? 

2019, co-authored with Lilit Popoyan, under publication at Ecological Economics Journal

While there is a growing debate among researchers and practitioners on the possible role of central banks and financial regulators in supporting a smooth transition to a low-carbon economy, the information on which macroprudential instruments could be used for reaching the “green structural change” is still quite limited. Moreover, the achievement of climate goals is still affected by the so-called “green finance gap”. The paper addresses these issues by proposing a critical review of existing and novel prudential approaches to incentivizing the decarbonization of banks’ balance sheets and align finance with sustainable growth and development objectives. The analysis carried out in the paper allows understanding under which conditions macroprudential policy could tackle climate change and promote green lending while containing climate-related financial risks.

Poster presented at the FINEXUS Conference (Zurich, January 2018)


Income inequality, consumer debt, and prudential regulation: An agent-based approach to study the emergence of crises and financial instability

2019, Economic Modelling Journal

The paper presents an agent-based model to study the interaction between income inequality and prudential regulations in a macroeconomic framework characterized by consumer debt. Simulation results show that income inequality is detrimental to both macro and financial stability as it leads to higher credit demands, higher unemployment rates, economic volatility, and financial fragility. Besides the importance of consumers’ leveraging, deleveraging externalities are found to be equally important for the emergence of crises and financial fragility because of the liquidity risk they entail. Minsky moments are also observed; they are related to consumers’ prudential behavior and their beliefs about the macroeconomic conditions. Concerning the policy relevance of our investigation, simulations allow us to highlight that the effectiveness of prudential regulation depends on the phase of the business cycle and that there is not a “one-size-fits-all” regulation. This study emphasizes that regulatory constraints should take into account the features of the economic agents, such as the distribution of income and their willingness to borrow, in addition to the features of the financial sector.


 

The role of finance in environmental innovation diffusion: an evolutionary modeling approach

2018, co-authored with Marco Valente, Journal of Economic Behavior & Organization

 

The implementation of climate adaptation and mitigation policies depend on the development of green technologies whose diffusion is constrained by a number of barriers which prevent them to spread broadly and at a fast pace. By means of an agent-based computational model, the paper investigates the macro and micro dynamics in presence of a “traditional” commercial bank and the role played by a state investment bank that explicitly supports green investments. Simulation results emphasize that environmental innovation is more diffused in the market when the presence of the public investment bank is combined with strong consumers’ preferences oriented towards environmental quality. The relevance of the paper is twofold. Besides contributing to the literature on the finance-innovation nexus by considering the role of climate finance within a complex systems framework, it provides a model that can be used as a tool to explore policies to foster environmental innovation diffusion.

Keywords: Agent-based computational economics; Climate finance; Public investment banks; Environmental innovation; Industrial dynamics; Innovation diffusion


Do financial constraints hamper environmental innovation diffusion? An agent-based approach

2018, co-authored with Marco Valente, SPRU Working Paper series

We develop a model that combines evolutionary economics concepts and methods with environmental economics concerns. The model is populated by consumers, heterogeneous firms, and a financial sector and is used to investigate the dynamic interactions between the demand and supply side, and the role played by binding financial constraints, in the diffusion of environmental innovations. The aim of the model is to understand how environmental goals can be effectively promoted and achieved in presence of a financial sector whose lending attitude is guided by long-termism rather than short-termism. We show that financial constraints act as a deterring barrier and affect firms’ innovation strategies as well as the evolution of technological paradigms. When financial constraints are less binding, firms do not perceive hindrances to the adoption of eco-innovation and, as a result, the presence of the average green technology in the market increases.


Big Data and Complexity: is Macroeconomics heading towards a new paradigm?

2017, Journal of Economic Methodology

The paper discusses the extent to which the availability of unprecedentedly rich datasets and the need for new approaches – both epistemological and computational – is an emerging issue for Macroeconomics. By adopting an evolutionary approach, we describe the paradigm shifts experienced in the macroeconomic research field and emphasize that the types of data the macroeconomist has to deal with play an important role in the evolutionary process of the development of the discipline. After introducing the current debate over Big Data in the social sciences, the paper presents a detailed discussion of possible and existing interactions between Big Data and Computational Behavioral Macroeconomics. We argue that Big Data applied to economic questions can lead to new styles of thinking and research methods, namely the development of a new research paradigm.


From micro behaviors to macro dynamics: an Agent-based economic model with consumer credit

2017, (co-authored with G. Giulioni), Journal of Artificial Societies and Social Simulation

The paper develops an agent-based model populated by heterogeneous consumers, a production sector and a banking sector. Taking a bottom-up approach, the paper aims at providing a first tool to analyze households’ borrowing dynamics in the different phases of the business cycle by relaxing some assumptions of mainstream consumption models and considering more realistic household borrowing behaviors. Although very simple, the model allows us to grasp the main implications of the interaction between consumers’ wants (desired consumption), consumers’ beliefs (their expectations about their future income), the behavior of the banking sector (rationing) and the behavior of the production sector (forecasting future demand). After presenting and discussing sensitivity analysis over a set of parameters, the paper reports simulation results and the ex-post validation by comparing artificial and empirical distributions computed using the European Household Finance and Consumption Survey data set. 


Building artificial economies: from aggregate data to experimental microstructure. A methodological survey
2014, Lecture Notes in Economics and Mathematical Systems, Springer-Verlag (co-authored).

Abstract 
This paper suggests a methodological appraisal of the main improvements witnessed by the methodology based on the interplay between Experimental Economics (EE) and Agent-based Computational Economics (ACE) in the last 5-6 years. EE and ACE proved to be “natural allies” in that they complement each other: EE helps ACE in dealing with his “degree of freedom” problem and ACE helps EE in controlling and providing benchmarks for experimental subjects’ behavior. The paper discusses the role Evolutionary Computation plays in this bidirectional relationship.


Households Debt Behavior and Financial Instability. Towards an Agent-based model with experimentally estimated behavioral rules

2014, International Symposium on Distributed Computing and Artificial Intelligence, University of Salamanca (Spain) – DCAI 2014 Proceedings, Springer.

Abstract 

The present paper suggests the development of an experimentally microfounded Agent-based model in order to cope with the complexity and instability of the macroeconomic environment. The focus of the paper is on the micro specification of the ABM. For the micro level, I suggest designing an experiment in order to gain insights into households’ behaviors. For the macro level, I plan to build an ABM where agents are estimated, rather than calibrated, by using data collected in the experimental laboratory.

 


The empirical microstructure of Agent-based models: recent trends in the interplay between ACE and Experimental Economics
2014, International Symposium on Distributed Computing and Artificial Intelligence, University of Salamanca (Spain) – DCAI 2014 Proceedings, Springer (co-authored).

Abstract

This paper suggests a methodological appraisal of the main improvements witnessed by the methodology based on the interplay between Experimental Economics (EE) and Agent-based Computational Economics (ACE) in the last 5-6 years. EE and ACE proved to be “natural allies” in that they complement each other: EE helps ACE in dealing with its “degree of freedom” problem and ACE helps EE in controlling and providing benchmarks for experimental subjects’ behavior. The paper discusses the role Evolutionary Computation plays in this bidirectional relationship.


Households Behaviors and Systemic Financial Instability: experimental insights and Agent-based simulations for macroeconomic policy analyses
2014, International Conference on Agents and Artificial Intelligence – ICAART 2014 Proceedings, Springer.

Abstract 
The present paper suggests the development of an experimentally microfounded Agent-based model in order to cope with the complexity and instability of the macroeconomic environment. The focus of the paper is on the micro specification of the ABM. For the micro level, I suggest designing an experiment in order to gain insights into households’ behaviors. For the macro level, I plan to build an ABM where agents are estimated, rather than calibrated, by using data collected in the experimental laboratory.


Avatar-based Macroeconomics: Experimental Insights into Artificial Agents Behaviour
2014, Icaart – International Conference on Agents and Artificial Intelligence 2014 Proceedings (co-authored)

Abstract 

In this paper, we present a new methodological approach based on the interplay between Experimental Economics and Agent-based Economics. Advances in the design and implementation of individual autonomous economic agents are presented. The methodology is organized in three steps. The first step focuses on agents. We use an inductive rather than a deductive approach: by means of the experimental method, we observe agents’ behaviors. The second step is the behavioral rules’ building process that allows us to study how to estimate and structure artificial agents. In the third step, the set of previously induced behavioral rules are used to build artificial agents, i.e. “molded” avatars, which operate in the “archetype” macroeconomic system. The resulting Multi-agent system serves as the macroeconomic environment for our simulations and economic policy analysis.

Keywords: Artificial Intelligence, Experimental Economics, Artificial Economy, Agent-based Computational Economics, Multi-agent Systems


Towards a Multi-Avatar Macroeconomic System
2013,  Advances on Practical Applications of Agents and Multi-Agent Systems, 97-109, Springer Berlin-Heidelberg (co-authored)

Abstract 

In this paper, we provide a prototype Multi-Agent macroeconomic system where artificial agents’ behavioral rules are calibrated using human behaviors. The artificial representation of humans, i.e. “molded” avatars, derives from a two steps process. The first step consists in performing laboratory experiments in order to gather microeconomic data. The second relies on the use of data mining heuristic techniques on the experimental data which allow for the identification of the behavioral models that better approximate humans’ behaviors. The implementation of these techniques, which we call microeconomic calibration, leads to the identification of heterogeneous agents. We maintain that the Multi- Avatar systems which arise from the heterogeneous microeconomic calibrated agents give the possibility to improve the existing Agent-based models. The proposed approach will generate consequently more reliable policies evaluation tools. The model discussed in the paper is motivated by the investigation of the role of entrepreneurs’ financial decisions over the business cycle. This topic was addressed especially by Hyman Minsky since the Fifties and recently gained new momentum in the scientific community after the onset of the financial crisis.

Keywords: Macroeconomics, Experimental economics, Agent-based Computational Economics, Microeconomic Calibration, Financial Instability Hypothesis


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