A Minskyan-Fisherian SFC model

A new working paper by Ítalo Pedrosa and Antonio Carlos Macedo e Silva, “A Minskyan-Fisherian SFC model for analyzing the linkages of private financial behavior and public debt” is available here
Abstract: This paper builds a stock-flow consistent (SFC) model to analyze how private financial behavior impacts fiscal variables, by exploring the linkages between the financial and productive sides of the economy with prices given by a Phillips curve. We study three different fiscal expenditure regimes: 1. Automatic stabilizer: government expenditures follow an exogenous long run trend; 2. Countercyclical fiscal expenditure; 3. Fiscal austerity: government reduces expenditures when it faces an increase in its debt to capital ratio. The model has three major implications, ratifying Keynesian intuitions. First, an increase in public debt is an unintended consequence of contractionary financial conditions. Second, in most cases countercyclical fiscal expenditures improve both the economic activity and the trajectory of public debt to GDP. Third, austerity policies postpone and magnify the after-shock adjustment, and may not be compatible with fiscal soundness.

Monetary economics: R code

I have received from Hamid Raza, working with Stephen Kinsella in Limerick, a package containing models from Godley & Lavoie Monetary economics, chapters 3 to 9.
They have been published in the model section of the website.
(I have not checked the code yet…)

I deeply thank Hamid, since R is a free software, and the availability of R code will be of great help to anyone who is not willing to purchase a software licence.

A Winter school on AB and SFC models

Applied Macro-Modelling: Fully Scalable Models – 2nd Edition

Winter School On Agent Based And Stock Flow Consistent Modelling
Limerick, January 26th – February 3th

Why You Should Join Our Winter School

If you are a highly motivated student of economics at master or Ph.D. level, or you are working with a research center or a public institution and want to spend one week studying, researching, discussing, and exchanging experiences in the nice atmosphere of an Irish University campus nurtured by international experts and fellow students from all around the world, our winter school offers you:

One-week winter university with international students and lecturers.
An opportunity to produce and confront research outputs such as thesis chapter or working paper with established scholars.
Lab modules, to learn how to implement and apply the theoretical models using software like R, Java.
Social activities

Info: s120.ul.ie/drupal/winterSchool2015

SFC models in Python

Here is a letter from Kenn Tamara, who developed the models in Godley-Lavoie using Python:

I was reading “Monetary Economics” by Godley and Lavoie and came across the sfc-models.net website. I have taken your eViews models and reimplemented them using Python (running the experiments and generating the figures).

Everything is open-source and is written with a package that I developed to help specify and solve the models. The models are implemented as iPython notebooks for easier viewing and can be found at:

Information on the pysolve package used to specify and solve the models can be found at:

(A little warning, the code for pysolve is still under development and there isn’t that much documentation yet)

I hope that the python implementation is useful and would like to contribute it to sfc-models.net.

Thank you,
Kenn Takara

Interactive SFC models

I recently discovered that Kevin W. Capehart has written a piece of code in Mathematica from one of my Eviews files for the Godley – Lavoie Monetary economics book, and turned it into a CDF, to illustrate the paradox of thrift

To run the simulation you need to install the free Wolfram reader, and activate it.

This little tool is potentially very useful in exploring stock-flow models, which are tipically non linear, and therefore difficult to solve analitically. Creating a nice interface which allows the user to check model responses to different values of parameters and exogenous variables could help find the range of parameter values for which the model is producing stable (or unstable etc) solutions.

New papers using the SFC approach

Ayoze Alfageme kindly offered to update our references database on publications adopting the stock-flow-consistent approach.
The following is a preliminary list of recent papers, that will soon be included in our database: