A Post-Keynesian Stock-Flow Consistent Macroeconomic Growth Model: Preliminary Results
Levy Economics Institute Working Paper No. 402
41 Pages Posted: 28 Feb 2004
Date Written: February 2004
Stock-flow consistent models may be considered the rallying point for heterodox authors interested in modeling macroeconomic relations, since these models incorporate real and financial relations in an entirely consistent way, therefore providing macroeconomic constraints to individual behavior. The present model expands on the Godley-Lavoie model of growth, which was based on a two-asset world, with only bank deposits and the shares issued by private corporations. The present model incorporates the financial relations among the central bank, private banks, and the fiscal policy of government, showing the endogeneity of money under different assumptions on banks' behavior. The model is used to analyze the relationship between the distribution of income and growth, and to study the impact of monetary policy.
Keywords: stock-flow models, growth models, distribution of income, monetary policy
JEL Classification: E1, E12, E17, E63
Suggested Citation: Suggested Citation