Stock‐Flow Consistent Macroeconomic Models: A Survey

Abstract

The stock-flow consistent (SFC) modeling approach, grounded in the pioneering work of Wynne Godley and James Tobin in the 1970s, has been adopted by a growing number of researchers in macroeconomics, especially after the publication of Godley and Lavoie (2007), which provided a general framework for the analysis of whole economic systems, and the recognition that macroeconomic models integrating real markets with flow-of-funds analysis had been particularly successful in predicting the Great Recession of 2007-9. We introduce the general features of the SFC approach for a closed economy, showing how the core model has been extended to address issues such as financialization and income distribution. We next discuss the implications of the approach for models of open economies and compare the methodologies adopted in developing SFC empirical models for whole countries. We review the contributions where the SFC approach is being adopted as the macroeconomic closure of microeconomic agent-based models, and how the SFC approach is at the core of new research in ecological macroeconomics. Finally, we discuss the appropriateness of the name "stock-flow consistent" for the class of models we survey.

Impacts of US Interest Rates on Growth, Income Distribution, and Macroeconomic Policy Space in Developing Countries: A SFC Supermultiplier Model

“…Although first called Sraffian supermultiplier (Serrano, 1995), the mechanisms of the model have been applied to neo-Kaleckian growth models (Allain, 2015;Lavoie, 2016;Nah and Lavoie, 2017;Hein, 2018), which include an autonomous investment component in the short-term. The neo-Kaleckian tradition has drawn influence from the New Cambridge School's argument of the importance of stock-flow relations on expenditures (Cripps and Godley, 1976) highlighting the relevance of stock-flowconsistent (SFC) modelling (Godley and Lavoie, 2007;Nikiforos and Zezza, 2018). Some SFC models have been developed to look at debt relations in supermultiplier models (Brochier and Silva, 2019;Pedrosa et al, 2023) and to look at financial aspects of developing countries (Nalin and Yajima, 2022;Perez Caldentey et al, 2023).…”