1,720,976 research outputs found
Stock-Flow Consistent Macroeconomic Modeling: Theory, Practice and Applications
No full textThe Great Recession made even clearer the need for a deep reassesment of the economic profession. Mainstream macroeconomic models (both DSGE and CGE types) failed at predicting both the financial crash and the effects of the policies put in place afterwards, in particular with respect to the effects of austerity and the increase of Financial Fragility. Broadly speaking, this was so because of the absence, in most of these models, of relevant aspects of the existing economic systems.
In particular, endogenous growth models suffer from major shortcomings: i.e., General Equilibrium framework, unreliable/untestable micro-foundations, not really endogenous growth models, no real endogenous money, no clear treatment of banks and of financial sector (and so on). In a period that has been labelled as "Financialisation" (Stockhammer, 2012), where the role and power of the financial sector has increased exponentially (which has contributed to the huge increase in income and wealth inequality highlighted by the works of Piketty and Saez, 2010), while the rest of the economy is facing "Secular Stagnation" (i.e. declining growth rates since the late 80s for output, productivity, wages), not to treat these issues means missing a big part of the picture.
However, there are alternatives. Stock-Flow Consistent (SFC henceforth) macroeconomic models, in turn, do pay a lot of attention to the financial side of the system and on the interdependencies that connect the balance sheets of the various institutional secotrs to their real transactions in a monetary production economy. This, coupled with the fact that there has been a wide recognitnion, from both the press and academics (Chancellor, 2010; Wolf, 2012; Schlefer, 2013; Bezemer, 2010), that Godley and applied models based on the SFC approach have been between the few that correctly predicted both the 2001 and the 2007-08 crisis (Godley, 1999; Godley et al. 2007), caused a renewed interest in the approach in both its theoretical and emprirical aspects, being it the perfect roof to host various heterodox views and to discuss how modern capitalist financialized systems works.
The aim of this work is threefold.
The first, carried out in Part I, is to provide an overview of the SFC approach to macroeconomic modelling from a theoretical/methodological perspective. In this regard, in Chapter 1 we present a SFC neo-Kaleckian Supermultiplier model that deals with the dynamics of government Deficits and Debt within a five-sector closed-economy with three types of assets. After discussing the structure of the model, the second part of the Chapter provides a methodological discussion of how the current SFC literature deals with these models. In particular, this is done by solving the model using the two different approaches (Marshall-Keynes vs Godley-Lavoie) and comparing the results. We will then present, in Chapter 2, Godely's Financial Balances model and discuss the Fundamental Identity and, more generally, how the SFC literature deals with Open Economy issues.
The second, dealt with in Part II , is how to make the step from a theoretical to an empirical model. Chapter 3 and 4 are indeed devoted to show how to build an applied SFC Macroeconomic Model, starting from the appropriate data sources, and how to deal with all the technical and practical issues that emerges when dealing with such models. We will guide the reader through all the steps needed to build a sound accounting structure, in Chapter 3, while Chapter 4 describes how to reconcile Stocks&Flows.
Finally, in Part III, we will show some application of the model developed in previous Chapters for forecasting the effects of Monetary and Fiscal economic policies over the medium-run. Contrary to the standard macroeconometric models, our SFC framework will make sure that all relevant real-financial connections would not get lost, to possibly detect increasing financial fragility and better evaluate the system wide effects of different regimes. In Chapter 5, we will report the full model devoleped in the Second Part of the work, "close" the Financial Acoounts for each sector, defining the buffer stocks for each asset class and sector and, finally, detail the estimation of the stochastic equations of the model. We will close this work in Chapter 6, where we will perform some Economic Policy simulation on our model, to ascertain the effect and outcomes of different expansionary fiscal policies, the interest rate transmission mechanism and, more generally, the system-wide effect on growth, distribution and Financial Stability
Breaking the divide. Can public spending on social infrastructure boost female employment in Italy?
Full text linkThis study investigates the impact of public spending on social infrastructure — including education, healthcare, childcare and social assistance — on the gender employment gap in Italian regions over the last two decades. Using a Panel Structural Vector Autoregressive (P-SVAR) model, we assess how these investments, while not explicitly targeting women, may plausibly support female employment—potentially by reducing the extent of unpaid care work and by creating jobs in care sectors that predominantly employ women. Our findings show that social infrastructure spending has a positive and long-lasting effect on private investment, GDP and employment across all regions. However, a reduction in the gender employment gap is detected only in Southern Italy and is limited to high-skilled women. These results highlight the need for targeted policies to address regional dis- parities and promote a more inclusive labour market, particularly in the South, where underinvestment is most severe
On the design of empirical stock–flow consistent models
Full text linkWhile the literature on theoretical macroeconomic models adopting the stock–flow consistent (SFC) approach is flourishing, few contributions cover the methodology for building an SFC empirical model for a whole country. Most contributions simply try to feed national accounting data into a theoretical model inspired by , 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, compared to the relevant research question to be addressed. We illustrate our arguments with examples for Greece and Italy. We also provide some suggestions on how to consistently use the financial and non-financial accounts of institutional sectors, showing the link between SFC accounting structures and national accounting rules
Coopetitive Technological Sovereignty: A Strategy to Reconcile International Collaboration with Knowledge and Economic Security
No full textIn just a few short months, the new government administration in the United States has thrown the world order into disarray. A potential global trade war, new global value chain configurations and shifting security alliances are reshaping geopolitics. Given the current uncertainty, access to developing technologies will be decisive, and technological sovereignty is more important for the European Union than ever before. How can the EU get up-to-speed? What steps can Europe take to ensure its technological sovereignty? How should it go about relations with China and the new Trump Administration with regards to its tech policy? What role does Big Tech play in European security
A stock-flow consistent quarterly model of the italian economy
No full textIn this chapter, the authors show how to address the missing links between the real and financial sectors within a post-Keynesian framework, presenting a quarterly stock-flow consistent (SFC) structural model of the Italian economy. They set up the accounting structure of the sectoral transactions, describing the transaction matrix and balance sheet matrix, starting from the appropriate sectoral data sources. They describe their estimation strategy, present the main stochastic equations, and, finally, discuss the main channels of transmissions in the model
An empirical Stock‐Flow Consistent regional model of Campania
Full text linkWe develop an innovative Stock-Flow Consistent macroeconometric regional model with five sectors, exploiting economic and financial statistics for Campania, covering the period 1995–2018, and propose a methodology to close the financial account of the private sector when financial data are lacking. The model is then used to perform medium term Economic Policy Scenario Analysis. We find that a debt-funded fiscal expansion has permanent positive effects on growth, with an impact multiplier above one and a medium-run multiplier of 0.71. In the case of a balanced-budget rule the same increase in government spending has still positive effects on growth – with a medium-run multiplier of 0.6 – but adverse ones on the private corporate sector
Fiscal policy, public investment and structural change: a P-SVAR analysis on Italian regions
Full text linkThis study analyses the regional impact of public expenditures focusing on three domains central to the Italian National Recovery and Resilience Plan (NRRP): green, digital and knowledge. Relying on a regional public expenditures sectoral dataset for the period 2000–19, we perform a panel structural vector autoregressive (P-SVAR) model showing that fiscal policy has positive and long-lasting effects on gross domestic product (GDP) and private investments. A relevant heterogeneity is detected, relative to: (1) the effects of sectoral spending in crowding-in investment; (2) the impact on regions’ ‘structural upgrading’; and (3) a discrepancy in fiscal multipliers across macro-areas. Nevertheless, the results suggest that the NRRP may help in reducing the Italian divide
The Asymmetric Impact of War: Resilience, Vulnerability and Implications for EU Policy
Full text linkIn 2019, over 96% of EU27 oil needs, nearly 90% of natural gas and over 43% of solid fuels were met by net imports, with the largest share coming from Russia (35% of oil, 40% of natural gas and 20% of solid fuels consumed in EU27). The decline in the share of oil since 2016 was more than off-set by the increase in gas and solid fuels
Going Beyond Counting First Authors in Author Co-citation Analysis
Full text linkThe present study examines one of the fundamental aspects of author co-citation analysis (ACA) - the way co-citation
counts are defined. Co-citation counting provides the data on which all subsequent statistical analyses and mappings
are based, and we compare ACA results based on two different types of co-citation counting - the traditional type that
only counts the first one among a cited work's authors on the one hand and a non-traditional type that takes into
account the first 5 authors of a cited work on the other hand. Results indicate that the picture produced through this non-traditional author co-citation counting contains more coherent author groups and is therefore considerably clearer. However, this picture represents fewer specialties in the research field being studied than that produced through the traditional first-author co-citation counting when the same number of top-ranked authors is selected and analyzed. Reasons for these effects are discussed
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