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Technology shocks and trade in a network:

How business cycles emerge from the interaction of autonomous agents.
by

Davoud Taghawi-Nejad

on 3 February 2014

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Transcript of Technology shocks and trade in a network:

Technology shocks and trade in a network: How
business cycles emerge from the interaction of
autonomous agents.

Firms

Intermediary goods

Final good

Round
Stage 1 - neoclassic
1. Replenishment of the factor of production (Rule 1)
2. Trade with trading partners (Rule 2
repeated 100 times in alternating order)
3. Production of the final good (Rule 3)
4. Paying the cost for trading partners (Rule 4)
1. Every round a different company might change technology. (Rule 8)
Stage 2 - network design
1. Ceasing connections with unprofitable trading partners (Rule 5 --> Rule 6)
2. Establishing connections with new trading partners (Rule 5 --> Rule 7)
Stage 3 - technology
Rule 2.
1. Ask all trading partners for the marginal productivity of the last factor of production of each type.

2. Buy the factor of production that gives the highest MPbuyer − price from the cheapest seller, except if not profitable for all factors of production.
When agents make less profits:
Full transcript