Models / Route

Flagship ACE lab

Housing / Credit ABM

This housing and credit route is the first applied ACE workspace on the site. It opens with a synthetic economy, then lets indicator constraints shape the starting point and validation layer.

Section Notes

All Models Agent-Based Housing / Credit DSGE Forecasting

Route notes

Households, banks, collateral values, and macroprudential rules stay visible in one housing-credit system.

Heterogeneity, network propagation, and policy experiments stay visible throughout the workflow.

Indicator data enters as initial conditions, target moments, and validation targets that shape the lab.

Cascade riskMonetary tighteningDemo economy

The experiment follows the housing block from repricing to spillover.

Borrowing costs reprice quickly, so housing demand slows before labor-market damage shows up.

Lagged effect

The slower phase shows up through defaults and unemployment, which means the system is not stabilizing cleanly on its own.

Distribution

The cross-section is less stretched, so the aggregate path stays closer to the median household outcome.

Network propagation

The network is loose enough that the shock stays more contained instead of turning into a full cascade.

System controls

Household heterogeneity56

Higher values widen the spread between resilient and fragile households.

Credit tightness52

Higher values make lenders retrench faster when stress rises.

Network connectivity48

Higher values make local defaults more likely to spill into wider contagion.

Bank leverage50

Higher values mean weaker collateral buffers and larger bank amplification.

Housing supply rigidity58

Higher values make supply slower to adjust, which keeps housing stress more persistent.

House-price pressure

-7.3 % q/q annualized

-0.9

How quickly the housing block is repricing.

Credit growth

-3.8 % q/q annualized

+0.5

How quickly new lending is expanding or contracting.

Default pressure

+8.0 % of exposed borrowers

+2.0

Where borrower distress starts to become macro-relevant.

Unemployment

+6.5 % of labor force

+1.4

The slower labor-market echo of the housing-credit shock.

Inequality pressure

+58.0 index

+12.2

A simple proxy for distributional strain.

Contagion intensity

+4.2 index

+0.9

How strongly local balance-sheet stress is spreading through links.

Same question, three lenses

How does a rate hike move through housing, credit, and labor?

The same housing-credit question changes meaning depending on whether the model centers interaction, equilibrium transmission, or historical co-movement.

Rate hike

ACE

Best fit

Interaction-first

The shock turns into a cascade: house-price pressure ends at -7.3%, credit growth at -3.8%, and contagion stays elevated at 4.2.

What it sees first

Borrower heterogeneity, lender retrenchment, collateral feedback, and contagion paths.

What it compresses

A single equilibrium benchmark and formal policy-rule welfare trade-offs.

Stay in ACE lab

NK DSGE

Strong fit

Structure-first

The NK route reads the move as a tighter real-rate shock that cools housing demand through the output gap and policy rule before defaults matter directly.

What it sees first

Policy transmission through inflation, slack, real rates, and the Taylor rule.

What it compresses

Household sorting, collateral chains, and network contagion.

Open NK DSGE

Empirical

Strong fit

Pattern-first

A multivariate empirical route would likely project weaker starts, permits, and construction as financing conditions tighten, using the historical housing-rate pattern as the baseline.

What it sees first

Observed co-movement in housing, labor, credit, and rates.

What it compresses

Policy-invariant structure, expectation shifts, and the cross-section of winners and losers.

Open interacting-series route

Same question	ACE	NK DSGE	Empirical
Immediate channel	Borrower cash flow and collateral values reprice first, then lender behavior tightens.	Real-rate pressure cools aggregate demand through the policy rule.	Rates, starts, and construction begin to co-move through the historical tightening pattern.
Housing block	House-price pressure ends near -7.3% annualized, because housing demand, leverage, and collateral all move together.	Housing cools through aggregate demand and real rates rather than borrower sorting.	Starts, permits, and construction weaken or stabilize according to the historical pattern in comparable windows.
Credit / default read	Credit growth ends near -3.8% and default pressure near 8.0%, so distress is explicit rather than implied.	Defaults stay compressed into a financial headwind instead of a separate contagion path.	Observed housing-credit deterioration would pull the baseline down once the data begins to register it.
Labor block	Unemployment ends near 6.5%, which means the labor market reacts after the housing-credit channel has already moved.	Slack rises through the output gap and Phillips-curve logic, but without a fragile-household channel.	Labor is mostly a lagging confirmation variable unless the historical window already shows clear slack.
Best use	Distribution, contagion paths, default clustering, and policy stress on vulnerable balance sheets.	Policy transmission, disciplined counterfactuals, and medium-run structural narratives.	Historical baseline, timing cross-checks, and model-versus-data comparison.

Why the lenses diverge

The same rate-hike question splits cleanly here: DSGE is strongest on policy transmission, empirical is strongest on the historical baseline, and ACE is strongest once fragile balance sheets and contagion become part of the story.

Indicator-constrained validation