Implications of zero-growth economics analysed with an agent-based model

A new study leveraging advanced computational modeling challenges the long-held economic dogma of perpetual growth. Researchers Dylan C. Terry-Doyle and Adam B. Barrett have published a 51-page paper titled "Implications of zero-growth economics analysed with an agent-based model," introducing the Post-Growth DYNamic Agent-based MINskyan (PG-DYNAMIN) model. This agent-based model, a type of AI simulation where autonomous 'agents' (like firms and households) interact, incorporates Minskyan financial dynamics to explore the micro- and macroeconomic stability of a capitalist system without growth. By tweaking an exogenous productivity parameter, the researchers compared growth scenarios against zero-growth trajectories, providing a novel, granular look at a post-growth future.

The PG-DYNAMIN model's simulations reveal a nuanced picture. On the positive side, a zero-growth economy demonstrated significant benefits: GDP was less volatile, systemic risk in the credit network reduced, unemployment rates were lower, and workers received a higher share of GDP as wages. The corporate debt-to-GDP ratio also fell, suggesting a more stable financial foundation. However, this stability comes with distinct trade-offs. The model identified a higher rate of inflation, a lower profit share for firms, and increased market concentration, meaning fewer, larger companies could dominate. Crucially, while crises in a growing economy are a known feature, the zero-growth scenario resulted in economic crises that, although potentially less frequent in some measures, were predicted to be more severe when they occurred, with increased default probabilities for firms during these periods.