Keynesian Theorizing During Hard Times: SStock-Flow Consistent Models as an Unexplored 'Frontier' of Keynesian Macroeconomics'

This paper argues that the Stock-Flow Consistent Approach to macroeconomic modeling can be seen as a natural outcome of the path taken by Keynesian macroeconomic thought in the 1960s and 1970s, a theoretical frontier that remained largely unexplored with the end of Keynesian academic hegemony. The representative views of Davidson, Godley, Minsky, and Tobin as different closures of the same SFC accounting framework are presented, and similarities and problems discussed.Post-Keynesian Models, Stock-Flow Consistency, Pitfalls Approach

Keynesian Theorizing During Hard Times: Stock-Flow Consistent Models as an Unexplored 'Frontier' of Keynesian Macroeconomics

This paper argues that the Stock-Flow Consistent Approach to macroeconomic modeling can be seen as a natural outcome of the path taken by Keynesian macroeconomic thought in the 1960s and 1970s, a theoretical frontier that remained largely unexplored with the end of Keynesian academic hegemony. The representative views of Davidson, Godley, Minsky, and Tobin as different closures of the same SFC accounting framework are presented, and similarities and problems discussed.Post-Keynesian Models, Stock-Flow Consistency, Pitfalls Approach

A Stock-Flow Consistent General Framework for Minskyan Analysis of Closed Economics

This paper reviews the general tenets of 'stock-flow consistent' and the 'formal Minskyan' literatures and argues that the advantages and weaknesses of the latter become clearer when analyzed with the tools of the former. It also analyzes a small but representative and influential sample of seminal 'formal Minskyan' models, particularly the Taylor- O'Connel model, in light of a fully consistent 'Minskyan artificial economy.' The paper also shows these models often assume oversimplified hypotheses (that don't do justice tothe richness of Minskyan analyses) and, more seriously, often ignore the logical implications of these hypotheses. Finally, the authors arugue that most of these problems can be tackled when 'formal Minskyan' models are phrased as 'closures' of the 'general Minskyan' accounting framework described in the paper.

"Keynesian Theorizing During Hard Times: Stock-Flow Consistent Models as an Unexplored "Frontier" of Keynesian Macroeconomics"

This paper argues that the Stock-Flow Consistent Approach to macroeconomic modeling can be seen as a natural outcome of the path taken by Keynesian macroeconomic thought in the 1960s and 1970s, a theoretical frontier that remained largely unexplored with the end of Keynesian academic hegemony. The representative views of Davidson, Godley, Minsky, and Tobin as different closures of the same SFC accounting framework are presented, and similarities and problems discussed.

A Simplified Stock-Flow Consistent Post-Keynesian Growth Model

A Simplified Stock-Flow Consistent Post-Keynesian Growth Model Claudio H. Dos Santos* and Gennaro Zezza** Abstract: Despite being arguably the most rigorous form of structuralist/post-Keynesian macroeconomics, stock-flow consistent models are quite often complex and difficult to deal with. This paper presents a model that, despite retaining the methodological advantages of the stock-flow consistent method, is intuitive enough to be taught at an undergraduate level. Moreover, the model can easily be made more complex to shed light on a wealth of specific issues.Post-Keynesian Growth, Stock-Flow Consistency, Real-Financial Interactions

"A Simplified 'Benchmark” Stock-flow Consistent (SFC) Post-Keynesian Growth Model"

Despite being arguably one of the most active areas of research in heterodox macroeconomics, the study of the dynamic properties of stock-flow consistent (SFC) growth models of financially sophisticated economies is still in its early stages. This paper attempts to offer a contribution to this line of research by presenting a simplified Post-Keynesian SFC growth model with well-defined dynamic properties, and using it to shed light on the merits and limitations of the current heterodox SFC literature.

"A Post-Keynesian Stock-Flow Consistent Macroeconomic Growth Model: Preliminary Results"

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.

"A Simplified Stock-Flow Consistent Post-Keynesian Growth Model"

Despite being arguably the most rigorous form of structuralist/post-Keynesian macroeconomics, stock-flow consistent models are quite often complex and difficult to deal with. This paper presents a model that, despite retaining the methodological advantages of the stock-flow consistent method, is intuitive enough to be taught at an undergraduate level. Moreover, the model can easily be made more complex to shed light on a wealth of specific issues.

"Is International Growth the Way Out of U.S. Current Account Deficits? A Note of Caution"

The current account deficit of the United States has been growing steadily as a share of GDP for more than a decade. It is now at an all-time high, over 5 percent of GDP (see Figure 1). This steady deterioration has been greeted with an increasing amount of concern (U.S Trade Deficit Review Commission 2000; Brookings Papers 2001; Godley 2001; Mann 2002). At The Levy Economics Institute, we have long argued that this burgeoning deficit is unsustainable. A current account deficit implies a growing external debt, which in turn implies a continuing shift in net income received from abroad (net interest and dividend flows) in favor of foreigners.We have also noted that with the private sector headed toward balance, a growing current account deficit implies a corresponding growing "twin" deficit for the government sector (Papadimitriou, et al 2002; Godley 2003). This latter scenario has already come to pass: the latest figures show that the general government deficit rose to an annual rate of more than 4 percent of GDP in the first quarter of 2003 and will certainly rise even more in the near future, since the federal deficit alone is officially projected to reach 4 percent by the end of this fiscal year (CBO 2003).

"Measures of the Real GDP of US Trading Partners: Methodology and Results"

This paper provides the details of the construction of new quarterly measures of the real GDPs of the 36 US trading partners that are taken into consideration by the Federal Reserve in its "broad exchange rate" indexes. These new measures have some important advantages. First, they allow the construction of various income aggregates and sub-aggregates, which makes it possible, for example, to match the Federal Reserve's "broad," "major-currency," and "other important" trading partner effective exchange rates and, more broadly, to discuss the geographical and geopolitical determinants of US trade. Second, they allow the construction of variants of the two different types of measures that are utilized in the literature, namely direct and export-share-weighted sums of trading-partner real GDPs. Finally, given that our new measures of GDP for these countries can be directly compared to each other, they can be of interest for other researchers who need a consistent dataset on a quarterly basis.