Sunday, September 4, 2016

Simon Wren-Lewis — More on Stock-Flow Consistent models

From the comments there:
Nick Edmonds4 September 2016 at 07:59
" would be a mistake for others to believe that the properties of their model show the importance of accounting rather than the theory they have used."

True, but please don't downplay the usefulness of SFC models, simply because some people make this mistake.
The question is whether study of this type of model, which emphasises balances and the relationship between them, can provide us with useful insights and help us focus on what matters. I think you yourself answer this question best when you state in your previous post:

".. the fact that leverage was allowed to increase substantially before the crisis was not something that most macroeconomists were even aware of let alone approved of. As I have said before, if I had seen a chart showing bank leverage .. before the crisis I would have been extremely worried."

Mainly Macro4 September 2016 at 11:28
Absolutely. I'm very pleased that people are working on these models. I just wish they acknowledged previous aggregate modelling and put a little more theory into them.
Mainly Macro
More on Stock-Flow Consistent models
Simon Wren-Lewis | Professor of Economics, Oxford University


Random said...

Hello Tom. I have to ask for a big favour from you.

Can you send emails, if you have the time, to Jeremy Corbyn and John McDonnell (the shadow chancellor) about MMT and say, calling for Neil Wilson and Bill Mitchell as advisors.

Jeremy is at (double check these BTW)

McDonnell (perhaps have to pose as constituent)

Email: Please clearly mark subject box with either Invitations, Press and Media, Parliamentary Business or Constituency.

No idea what heading it would come under!

Matthew Franko said...

Tom is SWL using the word "theory" correctly here:

" and put a little more theory into them"


What does he mean here? Causation? Prediction?

Tom Hickey said...

Not sure, Matt.

Random said...

SWL has replied.

Also, will you help me :-)

Tom Hickey said...

Also, will you help me :-)

Yes, I will look into it and do what I can.

Random said...

Thank you Tom. I figured we might have to contact people directly.

This information may or may not be helpful. If it is not just ignore it.

Firstly, it may be useful to get in contact with people on Labour's Economic Advisory Committee (other than SWL of course.) That is probably much lower priority as I don't think they will change their minds.

I have sent an email to John with none of those four things in the title and got this:

"Thank you for contacting the office of the Shadow Chancellor of the Exchequer.

Due to the high volume of correspondence, please accept this message as an acknowledgment that your e-mail has been received and will be dealt with as soon as possible. Your patience is appreciated.

For the following enquiries please contact:
Constituency - using the word 'Constituency' in the subject line or call 0208 569 0010
Media -
Campaigns -
Diary/Invitations/Meetings -"

I think you have to put one of those four but they have given me the other emails (Joe Ryle etc.)

Here is Jeremy's site:

Also, as there is a leadership election going on in the labour party they will be very busy at the moment. So if you get no replies send the same email again after (hopefully!) Jeremy is re-elected on 21st September I think:,_2016#Timetable

"Wednesday 21 September 2016 (12:00) – Ballot closes.
Saturday 24 September 2016 – Special conference to announce result (to be scheduled to ensure no clash with Women's Conference)."

Random said...

Also here is Neil's LinkedIn listen his accomplishments:

I guess you already have Bill's email.

Matthew Franko said...

Bill and Neil would make a hell of a tag team to hit Labor over the head with...

Nick Edmonds said...


When SWL says "... put a little more theory in them...", I take him to mean that he would like to see more explanation of why the behavioural functions might be specified as they are. Something like deriving the function from micro-foundations, although he may not go quite that far.

Needless to say, I don't agree with him.

Ignacio said...

There is no much use in theory if it's wrong. Like orthox economists micro fundations.