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

Adam B. Barrett; Dylan C. Terry-Doyle

arxiv: 2501.19168 · v2 · submitted 2025-01-31 · 💰 econ.GN · cs.MA· q-fin.EC

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

Dylan C. Terry-Doyle , Adam B. Barrett This is my paper

Pith reviewed 2026-05-23 04:27 UTC · model grok-4.3

classification 💰 econ.GN cs.MAq-fin.EC

keywords zero-growthagent-based modelMinskyan dynamicseconomic stabilitysystemic riskmarket concentrationeconomic crisesfirm defaults

0 comments

The pith

Zero-growth economies are viable in a Minskyan agent-based model but show lower GDP volatility alongside higher crisis severity and firm defaults.

A machine-rendered reading of the paper's core claim, the machinery that carries it, and where it could break.

The paper builds the PG-DYNAMIN agent-based model with Minskyan financial rules to compare growth and zero-growth trajectories in a capitalist economy with interest-bearing debt. Zero-growth is produced by lowering an exogenous productivity parameter, allowing simultaneous macro and micro analysis of stability metrics that prior studies had not examined at the firm level. The model finds zero-growth yields less volatile GDP, reduced credit-network risk, lower unemployment, higher wage shares, and less market instability, yet also higher inflation, greater market concentration, more frequent and severe crises, and elevated firm default rates during those crises.

Core claim

By developing the Post-Growth DYNamic Agent-based MINskyan (PG-DYNAMIN) model and inducing zero-growth through adjustment of an exogenous productivity parameter while retaining Minskyan interaction rules, the authors establish that zero-growth scenarios remain viable but display distinct dynamics: GDP is less volatile, systemic risk in the credit network falls, unemployment declines, the wage share of GDP rises, corporate debt-to-GDP falls, and market instability decreases, while inflation rises, the profit share falls, market concentration increases, economic crises become more frequent and severe, and firm default probabilities rise during crises.

What carries the argument

The PG-DYNAMIN agent-based model with Minskyan financial dynamics, in which zero-growth is generated by lowering a single exogenous productivity parameter while holding agent behaviors fixed.

If this is right

GDP volatility decreases under zero-growth conditions.
Systemic risk in the credit network is reduced.
Unemployment falls and the wage share of GDP rises.
Market instability declines while market concentration rises.
Economic crises occur more often and with greater severity, raising firm default probabilities during those periods.

Where Pith is reading between the lines

These are editorial extensions of the paper, not claims the author makes directly.

Policy discussions of degrowth would need to weigh the model's predicted gains in wage shares and employment against the projected rise in crisis severity and defaults.
The reported increase in market concentration under zero-growth could interact with antitrust or competition policy in ways the model does not explore.
Adding explicit environmental feedback loops to the model could test whether the observed stability differences persist when resource constraints are binding.
Historical episodes of low-growth economies could be compared directly against the model's volatility and default predictions for external validation.

Load-bearing premise

Adjusting only one exogenous productivity parameter produces a realistic zero-growth trajectory without breaking the validity of the Minskyan financial rules calibrated on growing economies.

What would settle it

Empirical observation that economies experiencing sustained near-zero growth exhibit higher unemployment or lower crisis severity than the model's growth scenarios would falsify the reported stability differences.

read the original abstract

The breaching of planetary boundaries and the potentially catastrophic consequences of climate change are leading researchers to question the endless pursuit of economic growth. Several macroeconomic modelling studies have now examined whether a zero-growth trajectory in a capitalist system with interest-bearing debt can be economically stable, with mixed results. However, stability has not previously been explored at the microeconomic level, where it is important to know the consequences of zero-growth on e.g., distribution of firm sizes, market instability and risk of individual firm bankruptcy. Here we address this by developing an agent-based model incorporating Minskyan financial dynamics, the Post-Growth DYNamic Agent-based MINskyan (PG-DYNAMIN) model, and carrying out simultaneous macro- and microeconomic analyses. Accounting for the fact that growing capitalist economies are unstable and produce crises, we compare the relative stability of growth and zero-growth scenarios. This is achieved by tweaking an exogenous productivity parameter. We find zero-growth scenarios are viable yet exhibit distinct dynamics from growth scenarios. Under zero-growth, GDP was less volatile, there was reduced systemic risk in the credit network, lower unemployment rates, a higher wages share of GDP for workers, lower corporate debt to GDP ratio, and a reduction in market instability. Additionally, there was a higher rate of inflation, lower profit share of GDP for firms, increased market concentration, more economic crises with higher severity, and increased default probabilities for firms during periods of crises.

Editorial analysis

A structured set of objections, weighed in public.

Desk editor's note, referee report, simulated authors' rebuttal, and a circularity audit. Tearing a paper down is the easy half of reading it; the pith above is the substance, this is the friction.

Desk Editor's Note private letter to a colleague

Zero-growth is produced by tweaking one productivity parameter with no check that the Minsky rules still apply, but the micro comparisons on firm defaults and market concentration are the actual addition.

read the letter

The main point is that zero-growth is modeled here simply by lowering an exogenous productivity parameter in their PG-DYNAMIN agent-based model, and the results show lower GDP volatility and reduced credit risk but more crises and higher defaults during downturns compared to growth scenarios. What the paper does is extend previous macro-only studies on zero-growth stability to include micro aspects like firm size distribution and individual bankruptcy probabilities. It incorporates Minskyan financial dynamics and runs comparative simulations, which is a direct way to address the question of whether capitalist systems with debt can handle no growth. The work is honest about the mixed outcomes and tries to account for the fact that growth economies are already unstable. That comparative framing is useful. The weak point is exactly the one in the stress test: there's no indication that the Minskyan rules and agent decisions remain appropriate when productivity is tweaked to zero. The model was likely calibrated on growing economies, so changing that one parameter might alter debt dynamics or firm behavior in ways that aren't realistic for a true zero-growth economy. Without robustness checks or alternative ways to induce zero-growth, like changing consumption or investment rules, the differences could be artifacts of the tweak rather than the growth rate itself. The abstract mentions no such validation. This paper is for researchers in ecological or post-growth economics who work with simulation models. Someone already familiar with ABMs in macro might find the micro results worth looking at, but it won't change minds outside that circle without stronger validation. It deserves a serious referee to check the implementation details and see if the central comparison holds up. I'd recommend sending it for review.

Referee Report

2 major / 1 minor

Summary. The paper introduces the PG-DYNAMIN agent-based model incorporating Minskyan financial dynamics to examine zero-growth trajectories in a capitalist economy with interest-bearing debt. By adjusting a single exogenous productivity parameter, the authors compare growth and zero-growth scenarios and report that zero-growth is viable but produces distinct outcomes: lower GDP volatility, reduced credit-network systemic risk, lower unemployment, higher wage share of GDP, lower corporate debt-to-GDP, and reduced market instability, alongside higher inflation, lower profit share, greater market concentration, more frequent and severe crises, and elevated firm default probabilities during crises.

Significance. If the comparative results are robust to the modeling choices, the work supplies the first micro-level examination (firm-size distributions, individual bankruptcy risks, market instability) of zero-growth stability within a Minskyan framework, complementing existing macro-only studies and addressing a gap in post-growth economics.

major comments (2)

[Abstract / Methods] Abstract and methods description: the central comparative claim rests on the assumption that setting the exogenous productivity parameter to zero generates a realistic zero-growth trajectory while leaving all Minskyan financial interaction rules and agent decision rules (originally calibrated for positive-growth economies) intact. No evidence is provided that this single-parameter adjustment preserves effective demand, debt dynamics, firm entry/exit thresholds, or the validity of the original calibration; without such validation the reported differences in volatility, defaults, and crisis severity cannot be attributed to zero-growth per se.
[Results] Results section (comparative statistics): the reported reductions in systemic risk and market instability under zero-growth are presented as direct consequences of the productivity tweak, yet the manuscript does not report sensitivity checks on how the productivity change interacts with the Minskyan debt and expectation-formation mechanisms; this interaction is load-bearing for the claim that zero-growth exhibits 'distinct dynamics.'

minor comments (1)

[Abstract] The abstract lists many outcomes without indicating which are statistically significant or how many simulation runs underlie the averages; adding this information would improve clarity.

Simulated Author's Rebuttal

2 responses · 0 unresolved

We thank the referee for their constructive comments, which identify key areas where additional justification and robustness checks would strengthen the manuscript. We address each major comment below and commit to revisions that directly respond to the concerns raised.

read point-by-point responses

Referee: [Abstract / Methods] Abstract and methods description: the central comparative claim rests on the assumption that setting the exogenous productivity parameter to zero generates a realistic zero-growth trajectory while leaving all Minskyan financial interaction rules and agent decision rules (originally calibrated for positive-growth economies) intact. No evidence is provided that this single-parameter adjustment preserves effective demand, debt dynamics, firm entry/exit thresholds, or the validity of the original calibration; without such validation the reported differences in volatility, defaults, and crisis severity cannot be attributed to zero-growth per se.

Authors: The PG-DYNAMIN model treats the exogenous productivity growth rate as the sole driver of long-run aggregate expansion, with all Minskyan financial interaction rules, firm decision heuristics, and other parameters held fixed to isolate the effect of the growth regime. These rules are formulated as general features of a capitalist economy with interest-bearing debt rather than being calibrated exclusively to positive-growth data. We acknowledge that the submitted manuscript provides no explicit validation tests confirming that effective demand, debt dynamics, and entry/exit thresholds remain internally consistent when productivity growth is set to zero. In the revised version we will insert a new Methods subsection that supplies the theoretical rationale for the single-parameter adjustment and reports supplementary simulation checks on the listed variables under both regimes. revision: yes
Referee: [Results] Results section (comparative statistics): the reported reductions in systemic risk and market instability under zero-growth are presented as direct consequences of the productivity tweak, yet the manuscript does not report sensitivity checks on how the productivity change interacts with the Minskyan debt and expectation-formation mechanisms; this interaction is load-bearing for the claim that zero-growth exhibits 'distinct dynamics.'

Authors: We agree that the absence of reported sensitivity checks on the interaction between the productivity parameter and the Minskyan debt and expectation-formation modules limits the strength of the attribution. Although the core experiments fix all other parameters, we will add a set of supplementary simulations in the revised Results section (and an accompanying appendix) that vary the productivity growth rate in a narrow band around zero and document the resulting behavior of debt ratios and expectation updating. These checks will clarify whether the reported differences in volatility, systemic risk, and crisis properties arise specifically from the zero-growth condition. revision: yes

Circularity Check

0 steps flagged

No circularity; outcomes are forward simulation results after exogenous parameter adjustment.

full rationale

The paper implements an agent-based model and generates zero-growth by setting an exogenous productivity parameter to a low value, then reports emergent metrics (volatility, unemployment, debt ratios, crises) as simulation outputs. No step equates any reported result to the parameter choice by definition, no fitted inputs are relabeled as predictions, and no self-citation or ansatz is invoked as load-bearing justification. The derivation remains a standard forward simulation under the stated modeling assumptions.

Axiom & Free-Parameter Ledger

1 free parameters · 1 axioms · 0 invented entities

Central claim rests on the PG-DYNAMIN agent-based model that extends existing Minskyan frameworks; the only explicit free parameter identified is the productivity setting used to enforce zero growth. No new entities are postulated.

free parameters (1)

exogenous productivity parameter
Tweaked to switch between growth and zero-growth regimes while holding other model structures fixed.

axioms (1)

domain assumption Minskyan financial dynamics (debt-financed investment, endogenous money, financial fragility) govern agent interactions in both growth and zero-growth regimes
Model is built on these dynamics as stated in the abstract.

pith-pipeline@v0.9.0 · 5791 in / 1349 out tokens · 36120 ms · 2026-05-23T04:27:14.078553+00:00 · methodology

discussion (0)

Lean theorems connected to this paper

Citations machine-checked in the Pith Canon. Every link opens the source theorem in the public Lean library.

IndisputableMonolith/Cost/FunctionalEquation.lean washburn_uniqueness_aczel unclear

?

unclear
Relation between the paper passage and the cited Recognition theorem.

The growth and zero-growth scenarios are accomplished by changing an average productivity growth parameter for the firms in the model... tweaking an exogenous productivity parameter.
IndisputableMonolith/Foundation/ArithmeticFromLogic.lean LogicNat recovery / embed_strictMono unclear

?

unclear
Relation between the paper passage and the cited Recognition theorem.

labour productivity evolves according to the stochastic differential equation (SDE) for geometric Brownian motion... g is the constant average growth rate

What do these tags mean?

matches: The paper's claim is directly supported by a theorem in the formal canon.
supports: The theorem supports part of the paper's argument, but the paper may add assumptions or extra steps.
extends: The paper goes beyond the formal theorem; the theorem is a base layer rather than the whole result.
uses: The paper appears to rely on the theorem as machinery.
contradicts: The paper's claim conflicts with a theorem or certificate in the canon.
unclear: Pith found a possible connection, but the passage is too broad, indirect, or ambiguous to say the theorem truly supports the claim.