More specifically, we use a modified version of the ACE model that we developed in
Ashraf et al. (2011), henceforth AGH (2011), for addressing the role of banks in an economic
system. In this model economy, all trades are coordinated by a self-organizing network of
trade specialists, as they are in reality by shops, brokers, middlemen, banks, realtors, and
so forth. Here, we simplify the model by ignoring the existence of banks. The model is
calibrated to U.S. data and simulated many times under difierent target inflation rates to
see what difierence the inflation target makes to the average level and variability of GDP,
the variability of inflation, and the average rate of unemployment.