IDEAS home Printed from https://ideas.repec.org/p/ucd/wpaper/201130.html
   My bibliography  Save this paper

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

Author

Listed:
  • Stephen Kinsella

    (Department of Economics, University of Limerick)

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.

Suggested Citation

  • Stephen Kinsella, 2011. "Words to the Wise: Stock Flow Consistent Modeling of Financial Instability," Working Papers 201130, Geary Institute, University College Dublin.
    • Handle: RePEc:ucd:wpaper:201130
    as

    Download full text from publisher

    File URL: http://www.ucd.ie/geary/static/publications/workingpapers/gearywp201130.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Barwell, Richard & Burrows, Oliver, 2011. "Financial Stability Paper No 10: Growing Fragilities? Balance Sheets in the Great Moderation," Bank of England Financial Stability Papers 10, Bank of England.
    2. Amendola, Mario & Gaffard, Jean-Luc, 1998. "Out of Equilibrium," OUP Catalogue, Oxford University Press, number 9780198293804.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Stefano Zambelli & N. Dharmaraj, 2013. ""Carry-on-Activity" and Process Innovation," ASSRU Discussion Papers 1306, ASSRU - Algorithmic Social Science Research Unit.
    2. Eugenio Caverzasi & Antoine Godin, 2013. "Stock-flow Consistent Modeling through the Ages," Economics Working Paper Archive wp_745, Levy Economics Institute.
    3. repec:hal:spmain:info:hdl:2441/6493 is not listed on IDEAS
    4. repec:hal:wpspec:info:hdl:2441/6762 is not listed on IDEAS
    5. Jean-Luc Gaffard, 2014. "Crise de la théorie et crise de la politique économique. Des modèles d'équilibre général stochastique aux modèles de dynamique hors de l'équilibre," Revue économique, Presses de Sciences-Po, vol. 65(1), pages 71-96.
    6. repec:spo:wpecon:info:hdl:2441/1931 is not listed on IDEAS
    7. Mauro Napoletano & Jean-Luc Gaffard, 2010. "Performances et politiques de croissance. Un éclairage empirique à partir d'une étude de l'effet de la taille des pays et nouvelles réflexions théoriques," Revue de l'OFCE, Presses de Sciences-Po, vol. 0(1), pages 213-248.
    8. Jean-Luc Gaffard, 2003. "Coordination, marché et organisation. Essai sur l'efficacité et la stabilité des économies de marché," Revue de l'OFCE, Presses de Sciences-Po, vol. 85(2), pages 235-270.
    9. Marletto, Gerardo, 2011. "Structure, agency and change in the car regime. A review of the literature," European Transport \ Trasporti Europei, ISTIEE, Institute for the Study of Transport within the European Economic Integration, issue 47, pages 71-88.
    10. Tommaso Ciarli & André Lorentz & Marco Valente & Maria Savona, 2019. "Structural changes and growth regimes," Journal of Evolutionary Economics, Springer, vol. 29(1), pages 119-176, March.
    11. Mario Amendola & Jean-Luc Gaffard & Francesco Saraceno, 2004. "Technological Shocks and the Conduct of Monetary Policy," Revue économique, Presses de Sciences-Po, vol. 55(6), pages 1241-1263.
    12. Amendola, M. & Froeschle, C. & Gaffard, J. -L. & Lega, E., 2001. "Round-about production, co-ordination failure, technological change, and the wage-employment dilemma," Journal of Economic Behavior & Organization, Elsevier, vol. 46(1), pages 1-22, September.
    13. Ingrao Bruna, 2004. "The Equilibrium Image of the Market," Journal des Economistes et des Etudes Humaines, De Gruyter, vol. 14(2), pages 1-20, December.
    14. repec:hal:spmain:info:hdl:2441/1931 is not listed on IDEAS
    15. repec:spo:wpecon:info:hdl:2441/c6t1fl36hv9s7q89j8m3l00al is not listed on IDEAS
    16. Franck Paolucci, 2007. "Des contraintes aux contributions des investissements en R&D aux Etats-Unis," Documents de Travail de l'OFCE 2007-16, Observatoire Francais des Conjonctures Economiques (OFCE).
    17. Giovanni Dosi & Andrea Roventini, 2017. "Agent-Based Macroeconomics and Classical Political Economy: Some Italian Roots," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 3(3), pages 261-283, November.
    18. Mario Amendola & Jean-Luc Gaffard & Fabrizio Patriarca, 2017. "Inequality and growth: the perverse relation between the productive and the non-productive assets of the economy," Journal of Evolutionary Economics, Springer, vol. 27(3), pages 531-554, July.
    19. Antonio Bianco, 2016. "Hicks’s thread (out of the equilibrium labyrinth)," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 40(4), pages 1229-1245.
    20. Caiani, Alessandro & Godin, Antoine & Caverzasi, Eugenio & Gallegati, Mauro & Kinsella, Stephen & Stiglitz, Joseph E., 2016. "Agent based-stock flow consistent macroeconomics: Towards a benchmark model," Journal of Economic Dynamics and Control, Elsevier, vol. 69(C), pages 375-408.
    21. Nayak, Purusottam & Mishra, SK, 2009. "Structural Change in Meghalaya: Theory and Evidence," MPRA Paper 15728, University Library of Munich, Germany.
    22. repec:spo:wpecon:info:hdl:2441/53r60a8s3kup1vc9l5643ehjk is not listed on IDEAS
    23. repec:spo:wpmain:info:hdl:2441/6362 is not listed on IDEAS
    24. repec:spo:wpmain:info:hdl:2441/4423 is not listed on IDEAS
    25. André Lorentz & Tommaso Ciarli & Maria Savona & Marco Valente, 2016. "The effect of demand-driven structural transformations on growth and technological change," Journal of Evolutionary Economics, Springer, vol. 26(1), pages 219-246, March.
    26. repec:hal:wpspec:info:hdl:2441/4423 is not listed on IDEAS
    27. Alessandro Caiani & Ermanno Catullo & Mauro Gallegati, 2018. "The effects of fiscal targets in a monetary union: a multi-country agent-based stock flow consistent model," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 27(6), pages 1123-1154.
    28. Mario Amendola & Jean-Luc Gaffard, 2009. "Capitalism Dynamism: Efficiency and Fairness," Documents de Travail de l'OFCE 2009-25, Observatoire Francais des Conjonctures Economiques (OFCE).
    29. repec:spo:wpecon:info:hdl:2441/6491 is not listed on IDEAS
    30. repec:hal:spmain:info:hdl:2441/7321 is not listed on IDEAS
    31. Daniel Detzer, 2012. "New instruments for banking regulation and monetary policy after the crisis," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 9(2), pages 233-254.

    More about this item

    Keywords

    Instability; finance; stock flow consistent models;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ucd:wpaper:201130. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Geary Tech (email available below). General contact details of provider: https://edirc.repec.org/data/geucdie.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.