An Agent-based Model of Debt Deflation in the Japanese Economy

摘要

Japan has experienced malignant deflation since "the bubble burst" in 1989. There has been a surge of literature on macroeconomic policies that purports to save the ailing Japanese economy. Various economic policies have been proposed as remedies. Only a few works, however, examine the efficacy or effect of these policies, because appropriate forecasting tools have thus far been unavailable in economics. For instance, the debt deflation problem cannot be derived from interactions between the government, banks, and estate owners, because the globe of the model is described and simulated from the viewpoint of microeconomics. In the field of Computational Organization Theory (COT), some studies have started to develop an agent-based modeling approach, which simulates several complex social phenomena and then analyzes some would-be social scenarios using them. We have applied the modeling simulation method of COT to the field of macroeconomics. In this paper, we develop a macroeconomic model and present simulation results as the first step in applying an agent-based simulator to complex macro economies. Our study is an attempt to provide a tool for evaluating different macroeconomic policy scenarios. That is to say, this research can be extended so as to elucidate the ongoing deflation and develop a plan to alleviate it in Japan. Our model uses the balance sheet of the bank and links the investment behavior of the lending business with the banks' behavior organically, and therefore, a macroeconomics simulation consisting of asset prices, consumer prices, and level of bank interest can be constructed. By constructing an artificial micro economy including a central bank and a commercial bank, this paper attempts to examine strict decision-making in loan supply and bad loan management by private banks as well as the degree of monetary intervention by the central bank, and how this affects the general performance of the economy. The virtual experiment demonstrates that the intervention is unnecessary if the commercial bank manages credit creation and nonperforming loans in a self-controlling way. Otherwise, the intervention is both welcomed and effective. Expected Results are as follows: (1) observation of the emerging mechanisms of the deflation that the Japanese economy is experiencing (examination of theories that conflict with each other); (2) proposal of a financial policy to put the economy in a preferable recovery orbit to elucidate the deflation (including the examination of the inflation target theory and the depreciation of the yen inducement policy).