Dimitri Papadimitriou, Gennaro Zezza, and Michalis Nikiforos have put together a stock-flow consistent model for Greece in order to analyze the path of that nation’s struggling economy and assess alternatives to reigning austerity policies. This is a macroeconomic model based on the New Cambridge approach of Wynne Godley and is the same sort of model used for the Levy Institute’s US strategic analysis series....
The troika’s (EC/IMF/ECB) “internal devaluation” strategy — based on the idea that forcing a reduction in wages will increase competitiveness and boost export-led growth — isn’t faring well.Multiplier Effect
A New Stock-Flow Model for Greece Shows the Worst Is Yet to Come
Michael Stephens
This is a prescription for a rise in radical politics and eventually takeover by the military to maintain order. What's not to like about Pinochet's example in imposing neoliberalism?
4 comments:
The stock flow model provides a significantly more accurate prediction than the neoclassical rational agent bullshit model alternatives.
Ironically market forces will drive adoption of MMT. The "rational" investor (if such a beast exists) demands better forecasts.
Does not the chief economist of Goldman Sachs use a similar model? He may be sitting on asymmetric information for now, but the herd will catch up eventually.
"Does not the chief economist of Goldman Sachs use a similar model? He may be sitting on asymmetric information for now, but the herd will catch up eventually."
Right. Jan Hatzius brought Godley to GS. That is the biggest reason to be bullish about the SFC approach based on sectoral balances. The rest of the financial world will have to follow to compete once they figure it out.
The Vice President of the ECB, Vítor Constâncio, has also praised Godley's SFC approach and Minsky's FIH in several of his public interventions.
A case perhaps of having a neoliberal outlook while retaining realistic models in order to find out where the proposed structural reforms are going to - effectively - lead the economy,
Post a Comment