Stock‐Flow Consistent Macroeconomic Models: A Survey

36 Pages Posted: 13 Nov 2017

See all articles by Michalis Nikiforos

Michalis Nikiforos

Bard College - The Levy Economics Institute

Gennaro Zezza

University of Cassino - Department of Economics; Bard College - The Levy Economics Institute

Multiple version iconThere are 2 versions of this paper

Date Written: December 2017

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.

Keywords: Economic policy, Financial models, Macroeconomic models, Stock‐flow consistency

Suggested Citation

Nikiforos, Michalis and Zezza, Gennaro, Stock‐Flow Consistent Macroeconomic Models: A Survey (December 2017). Journal of Economic Surveys, Vol. 31, Issue 5, pp. 1204-1239, 2017, Available at SSRN: https://ssrn.com/abstract=3069153 or http://dx.doi.org/10.1111/joes.12221

Michalis Nikiforos (Contact Author)

Bard College - The Levy Economics Institute ( email )

Blithewood
Annandale-on-Hudson, NY 12504-5000
United States
(001)845-758-7735 (Phone)

HOME PAGE: http://www.mnikiforos.net

Gennaro Zezza

University of Cassino - Department of Economics ( email )

Cassino
Italy

HOME PAGE: http://gennaro.zezza.it

Bard College - The Levy Economics Institute ( email )

Blithewood
Annandale-on-Hudson, NY 12504-5000
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
7
Abstract Views
249
PlumX Metrics