Showing posts with label
sectoral financial balances model.
Show all posts
Showing posts with label
sectoral financial balances model.
Show all posts
[NOTE: This is largely a RE-POST of the second part of a recent post connecting the SFB and IE models. The main difference is that an extra section has been added at the end, noting how analysis of the sectoral balances enabled some economists to identify problems that later culminated in the global financial crisis and Great Recession. In retrospect, I prefer the material in this post to stand alone, for inclusion in the 'Posts to Read First', rather than potentially getting lost at the end of a longer post. The previous post has been renamed as well as shortened through the deletion of the material in this post. This note will self-destruct in a few days.]
Heteconomist
Introduction to the Sectoral Financial Balances ModelPeter Cooper
This is a follow-up to a recent post on the income-expenditure (IE) model. It is at a similar introductory level except that some knowledge is assumed from the earlier post. Those unfamiliar with the model might find it helpful to read the earlier post before this one. This post has two purposes. The first is to graph the IE model. The second is to relate the IE model to the sectoral financial balances (SFB) model and illustrate its applications. The SFB model has been discussed in the blogosphere by a number of modern monetary theorists, including Bill Mitchell, Robert Parenteau, Eric Tymoigne,Daniel Conceicao and Scott Fullwiler, prompted by a post of Paul Krugman's which contained a useful diagram.
