I have been invited to give a course on sfc models in Pavia (Dec.14-16), along with a seminar on the current financial crisis (my slides, in Italian, are here).
Here are the slides I used to introduce the course. The course developed a simple sfc-model from the very beginning:
- Model matrices
- The simple model, simulated in Excel
- Simple calculations to obtain reasonable parameters for the equations
Eviews models are available here. They include
- model1: a simple sfc model with banks. Income distribution is fixed, investment growth is given. The hidden equation is deposits = loans
- model2: same as model 1, but with more reasonable values for capital depreciation, so that all stocks have reasonable values
- model3: first attempt to introduce a price for equities and portfolio choice between equities and deposits, but the accounting is wrong…
- model4: as model 3, but the accounting (for the demand for loans) has been fixed
- model5: as model 4, with a better specification for expected wealth
- model6: investment growth now depends on capacitiy utilization and the cost of borrowing
- model7: endogenous price level, accounting at constant and current prices
The next logical step would be to introduce a Phillips curve…
For who is interested in empirical stock-flow-consistent models, I prepared some Eviews programs with comments, which can be downloaded from my teaching platform here.
Register, and request enrollment to the course “Intoduction to macroeconometric models”