Modeling economic forces, power relations, and stock-flow consistency: a general constrained dynamics approach
Oliver Richters and
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Erhard Gloetzl: Institute for the Comprehensive Analysis of the Economy, Johannes Kepler University Linz, Austria;
Authors registered in the RePEc Author Service: Erhard Glötzl ()
No V-409-18, Working Papers from University of Oldenburg, Department of Economics
In monetary Stock-Flow Consistent (SFC) models, accounting identities reduce the number of behavioral functions to avoid an overdetermined system of equations. We relax this restriction using a differentialalgebraic equation framework of constrained dynamics. Agents exert forces on the variables according to their desire, for instance to gradually improve their utility. The parameter ‘economic power’ corresponds to their ability to assert their interest. In analogy to Lagrangian mechanics, system constraints generate additional constraint forces that lead to unintended dynamics. We exemplify the procedure using a simple SFC model and reveal its implicit assumptions about power relations and agents’ preferences.
Keywords: Economic models; Disequilibrium Dynamics; Stock-Flow Consistent Models; Post Keynesian; Constrained Dynamics; Lagrangian Mechanics; Procedural Rationality. (search for similar items in EconPapers)
Date: 2018-05, Revised 2018-05
New Economics Papers: this item is included in nep-mac and nep-upt
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Published in Oldenburg Working Papers V-409-18
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Journal Article: Modeling economic forces, power relations, and stock-flow consistency: a general constrained dynamics approach (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:old:dpaper:409
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