%0 Unpublished work %T No Man is an Island: The Impact of Heterogeneity and Local Interactions on Macroeconomic Dynamics %+ Scuola Universitaria Superiore Sant'Anna [Pisa] (SSSUP) %+ Observatoire français des conjonctures économiques (Sciences Po) (OFCE) %A Guerini, Mattia %A Napoletano, Mauro %A Roventini, Andrea %8 2016-06-01 %D 2016 %K Agent-based model %K Local interactions %K Heterogenous agents %K DGSE Model %Z Humanities and Social Sciences/Economics and FinancePreprints, Working Papers, ... %X We develop an agent-based model in which heterogeneous firms and households interactin labor and good markets according to centralized or decentralized search and matchingprotocols. 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 study the effects of negative productivity shocks by way of impulse-response func-tions (IRF). Simulation results show that when search and matching are centralized, theeconomy is always able to return to the full employment equilibrium and IRFs are similarto those generated by DSGE models. However, when search and matching are local, co-ordination failures emerge and the economy persistently deviates from full employment.Moreover, agents display persistent heterogeneity. Our results suggest that macroeco-nomic models should explicitly account for agents’ heterogeneity and direct interactions %G English %2 https://sciencespo.hal.science/hal-03459315/document %2 https://sciencespo.hal.science/hal-03459315/file/wp2016-18-guerini-nomanisanisland.pdf %L hal-03459315 %U https://sciencespo.hal.science/hal-03459315 %~ SHS %~ SCIENCESPO %~ AO-ECONOMIE %~ USPC %~ OFCE %~ SCPO_OA %~ SCPO-REPEC