STOCK-FLOW CONSISTENT MACROECONOMIC MODELS: A SURVEY
Authored by Michalis Nikiforos, Gennaro Zezza
Date Published: 2017
DOI: 10.1111/joes.12221
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Abstract
The stock-flow consistent (SFC) modelling approach, grounded in the
pioneering work of Wynne Godley and James Tobin in the 1970s, has been
adopted by a growing number of researchers in macroeconomics, especially
after the publication of Monetary Economics by Godley and Lavoie, which
provided a general framework for the analysis of whole economic systems,
and the recognition that macroeconomic models integrating real markets
with flow-of-funds analysis had been particularly successful in
predicting the Great Recession of 2007-2009. We introduce the general
features of the SFC approach for a closed economy, showing how the core
model has been extended to address issues such as financialization and
income distribution. We next discuss the implications of the approach
for models of open economies and compare the methodologies adopted in
developing SFC empirical models for whole countries. We review the
contributions where the SFC approach is being adopted as the
macroeconomic closure of microeconomic agent-based models, and how the
SFC approach is at the core of new research in ecological
macroeconomics. Finally, we discuss the appropriateness of the name SFC'
for the class of models we survey.
Tags
Economic policy
Economic-growth
Income-distribution
Exchange-rates
Euro area
Financial models
Macroeconomic models
Stock-flow
consistency
Current account imbalances
Macro-econometric model
Portfolio balance
Twin
deficits
Uk economy
Monetary