Gilt-Edged Models (GEM)

Agent-Model Accounting

The accounting at the heart of all my agent-based (computational) monetary system models is based principally, but not only, on the sectoral accounting systems presented by Wynne Godley and Marc Lavoie (G&L) in their book Monetary Economics. Incrementally sophisticated agent-based models (ABMs) include model simple (ABMSIM), portfolio choice (ABMPC) and liquidity preference (ABMLP). ABMLP is a system in which perpetuities (consols) are never redeemed. In a simple behavioural relationship between the government and household sector, whatever bonds are demanded by households are supplied by the government.

The most recent model, agent-based model liquidity preference - extended (ABMLP-X), is a representation of a system that extends the earlier models with the inclusion of a public debt management office (DMO), a commercial (private) bank and a financial asset fund manager. Each class agent has its own brain (logic), its own behaviours (goals) and its own balance sheet.

The DMO is mandated to create and issue an array of long and short term money instruments. The private bank not only creates loans and deposit monies for households and firms, but acts as the system's primary dealer in order to absorb issuance of the government's debt instruments. In this multi-functional role the private bank may also use its relationships with the central bank to conduct phase 1 open market operations (OMO) when liquidity conditions are signaling financial sector stress. OMO tools include, but are not limited to, reserve balance settlement continuity (a type of auto-collateralisation), liquidity support and collateral repurchase arrangements.

Architecture & Presentation

Models are written in the Python programming language using the project Mesa framework. View a brief sketched overview of the project.