Stock-flow Consistent Macroeconomic Models: A Survey
Michalis Nikiforos and
Economics Working Paper Archive from Levy Economics Institute
The stock-flow consistent (SFC) modeling 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 Godley and Lavoie (2007), 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 2007-9. 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 "stock-flow consistent" for the class of models we survey.
Keywords: Macroeconomic Models; Stock-flow Consistency; Financial Models; Economic Policy (search for similar items in EconPapers)
JEL-codes: E1 E17 E50 E60 F41 G00 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dcm, nep-mac and nep-pke
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