Words to the Wise: Stock Flow Consistent Modeling of Financial Instability

Stephen Kinsella ()

No 201130, Working Papers from Geary Institute, University College Dublin

Abstract: The crisis has exposed the failure of economic models to deal sensibly with endogenously generated crises propagating from the financial sectors to the real economy, and back again. The goal of this paper is to review the method of stock flow consistent modeling to highlight areas in which it is deficient. I argue there is a fruitful research agenda in shoring up these deficiencies. The objective of stock flow modeling should be the ability to practically model unstable macroeconomies, and in particular their interactions with the financial sector. These models should provide 'Words to the Wise', and until they do, they are just thought experiments.

Keywords: Instability; finance; stock flow consistent models (search for similar items in EconPapers)
JEL-codes: E32 E37 E51 G33 (search for similar items in EconPapers)
Pages: 14 pages
Date: 2011-11-07
New Economics Papers: this item is included in nep-mac
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Persistent link: https://EconPapers.repec.org/RePEc:ucd:wpaper:201130

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