Decentralized economic model reveals how extended crises can trap economies in unemployment.
The article presents a model that shows how different groups like individuals, firms, and banks interact in markets for goods, labor, credit, and deposits. By using computer simulations, the researchers found that the model can create things like economic cycles, changes in GDP, fluctuations in unemployment rates, and financial instability. They also discovered that government intervention is crucial for stabilizing the economy during crises. The model suggests that without outside help, the economy can get stuck in high unemployment for a long time.