Stock-Flow Consistent Macroeconomic Modelling
|Author:||Bc. Alex Vinogradov|
|Year:||2020 - summer|
|Leaders:|| doc. Ing. Tomáš Cahlík CSc.
|Work type:|| Bachelors
|Awards and prizes:||Deloitte Outstanding Thesis Award|
|Abstract:||This paper extends the work of Marc Lavoie and Wynne Godley in the book
Monetary Economics: An Integrated Approach to Credit, Money, Income,
Production and Wealth“, by creating an SFC (Stock-flow consistent) model
with two sectors of private firms.
To make the model intelligible, the thesis starts with the introduction
of some of the post-Keynesian principles, then the defining characteristics
of the SFC modeling are introduced, as well as the software EViews, which
can be used to build SFC models. The principles are then used to narrate
several models from the aforementioned book, which contain certain motifs
that are essential for SFC modeling as a whole and for the novel model in
The novel model builds on a simple model with the markup pricing. By
splitting the sector of firms into two, various asymmetries in price-setting
mechanism and wage-setting mechanisms were examined by simulating the
change of ratios between sectors and the change of markup. The results
supported the classical notion that the side which adjusts price less bears
the greater cost.