Workers' debt-financed consumption: a supermultiplier stock-flow consistent model

Gabriel Vieira Mandarino, Claudio H. Dos Santos and Antonio Carlos Macedo e Silva
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Gabriel Vieira Mandarino: Federal University for Latin American Integration (UNILA), Foz do Iguaçu, Brazil
Claudio H. Dos Santos: Institute for Applied Economic Research (IPEA), Brasília, Brazil
Antonio Carlos Macedo e Silva: Institute of Economics, University of Campinas (UNICAMP), Brazil

Review of Keynesian Economics, 2020, vol. 8, issue 3, 339-364

Abstract: This paper presents a supermultiplier stock–flow consistent model of economic growth led by debt-financed consumption of workers. In so doing it tries to shed light on the financial requirements of growth trajectories based on induced investment. The model explicitly derives the aggregate financial needs of both workers and firms and how these needs can be met by the banking sector – mapping out all the stock and flow implications of the assumed financial transactions for all sectors of the economy at hand. An analytic solution for the nature of the steady states of the model is then provided and its dynamic properties analysed by means of computer simulations.

Keywords: supermultiplier; stock–flow consistent approach; workers’ debt-financed consumption (search for similar items in EconPapers)
JEL-codes: E11 E12 E17 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (4)

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