Three Fiscal Policy Experiments in an Agent-Based Macroeconomic Model

In this paper, I build from scratch a basic agent-based macroeconomic model, featuring fifty representative agents whose decisions to consume and save depend on the current relative performance of the economy at-large. I run three different experiments in the framework: the first, on the effects of tax and spending "flexibility" on stabilizing output; the second, on the ability of spending stimulus to stabilize output; and the third, on redistributive measures across income groups and their effects on aggregate economic performance. I find that tax and spending flexibility accelerates the path back to stability after an initial imposed downturn; that spending stimulus does much the same, though with a greater initial "kick"; and that redistribution in this model may take place and increase the welfare of lower-income agents without imposing a significant burden on overall performance.