ETD

• agent-based-model
• cost-shock
• inflation

This thesis extends the Keynes–Schumpeter Agent-Based Model by introducing a microfounded and detailed price-setting behaviour for firms in the consumption-goods sector. This enhancement makes it possible to analyse endogenously generated inflationary surges through a simulated experiment in which an exogenous energy shock triggers rising price dynamics. The exercise shows how supply shocks can produce persistent inflationary episodes. Such persistence does not necessarily rely on positive feedback mechanisms between prices and wages; rather, it can emerge from the adaptive price-adjustment rules of firms and from aggressive increases in mark-ups, in line with the so-called sellers’ inflation hypothesis. These inflationary surges also affect functional income distribution, with long-lasting consequences for the overall performance of the economic system.