Financial fragility, industrial dynamics, and business fluctuations in an agent-based model

In this paper we present and discuss a simple financial accelerator agent-based model, whose conceptual core is the interaction of heterogeneous firms and the banking system. Its simplicity notwithstanding, the model is able to replicate through simulations a large number of stylized facts concerning the shape and evolution over time of the distribution of firms ’ sizes, growth rates, profits, and “bad debt.