Gennaro Zezza and Francesco Zezza — On the Design of Empirical Stock-Flow-Consistent Models

While the literature on theoretical macroeconomic models adopting the stock-flow-consistent (SFC) approach is flourishing, few contributions cover the methodology for building a SFC empirical model for a whole country. Most contributions simply try to feed national accounting data into a theoretical model inspired by Wynne Godley and Marc Lavoie (2007), albeit with different degrees of complexity.

In this paper we argue instead that the structure of an empirical SFC model should start from a careful analysis of the specificities of a country’s sectoral balance sheets and flow of funds data, given the relevant research question to be addressed. We illustrate our arguments with examples for Greece, Italy, and Ecuador.

We also provide some suggestions on how to consistently use the financial and nonfinancial accounts of institutional sectors, showing the link between SFC accounting structures and national accounting rules.

Levy Economics Institute
On the Design of Empirical Stock-Flow-Consistent Models

Gennaro Zezza and Francesco Zezza

Brian Romanchuk — The Relationship Between sfc_models And Godley And Lavoie

The text Monetary Economics: An Integrated Approach to Credit, Money, Income, Production and Wealth, by Wynne Godley and Marc Lavoie is cited heavily within the sfc_models framework. This text is a standard text for SFC modelling, and has already been the object of extensive modelling. The fact that the models are well known is extremely useful from the point of view of development. These existing models were used to calibrate the sfc_models code.

(This article is an unedited draft of a section from my upcoming book "Introduction to SFC Models with Python.")

Bond Economics
The Relationship Between sfc_models And Godley And Lavoie
Brian Romanchuk

Jo Michell — Thoughts on the NAIRU

If you are following this.

Critical Macro Finance

Thoughts on the NAIRU
Jo Michell

Jason Smith — There is no interpretation, only equation

Jason Smith comments (unfavorably) on Godley & Lavoie.

That dystopian vision can be replaced with something that could be consistent with a much more realistic economy by adding in the constant $\Gamma$. With $\Gamma$, households are paid with direct deposits at banks that are backed by their holdings of government bonds via fractional reserve banking. People buy and sell stuff at any point during a quarter. Velocity of scrip is still proportional to the "velocity" of government bonds ... but as G&L say, this is a toy model.

Information Transfer Economics
There is no interpretation, only equation
Jason Smith