Recent Posts

Wednesday, March 22, 2017

Modelling A Gold Standard

Although the topic of the Gold Standard often comes up in economic discussions, their actual operation is less well understood. This article explains how a theoretical model of a Gold Standard works, as implemented by stock-flow consistent (SFC) models. This is a unedited draft of a section of an upcoming book that describes how to use the Python sfc_models framework.

Sunday, March 19, 2017

Book Review: Modern Monetary Theory And European Macroeconomics

Dirk H. Ehnts, a lecturer in economics at Bard College, Berlin, has written Modern Monetary Theory and European Macroeconomics. The book acts an introduction to Modern Monetary Theory (MMT), aimed specifically at the situation in the euro area. This is distinctive, as a great deal of the MMT literature discusses the situation of floating currency sovereigns (which is the preferred position in MMT, as distinct from the rest of the post-Keynesian literature, where some economists are in favour of currency pegs). The later chapters of the book give a historical explanation of the euro crisis, and offers an outline of how the euro area can be reformed. The book is aimed at non-specialist readers.

Python SFC Models Update -- Syntax Change

Progress has been good; I now how have the external sector (open economy) working properly. It look a few tries (I hate foreign exchange translations), but it now looks good. Additionally, there will be a major change to the interface code for how sector and Country objects are created. The sector description is not heavily used, and so it will no longer be required to be specified in the object construction.

Thursday, March 16, 2017

The Robots Are Coming For Your Equations!


A visual demonstration of how the sfc_models generates SFC model equations with algorithms. I demonstrate Model REG, from Chapter 6 of Godley and Lavoie's Monetary Economics. The model is regional, with a North and South region (in the same currency zone). The example shows the effect of an increase of the propensity to import.

The model ends up with over 100 equations (although some of those are initial condition specifications, and includes constant parameters).

I made a few mistakes in the commentary; I kept saying "propensity to consume" instead of "propensity to import". The code descriptions are correct...

Wednesday, March 15, 2017

Fed Hike Cycle: The Long Game

Chart: U.S. Forward Rate Versus Historical Average Short Rate

The Federal Reserve is expected to raise rates this afternoon. I am unsure what the Treasury market reaction will be, but my guess is that it will surprise some people who expect yields to be much higher than they are. This article explains why the Treasury market reaction has been relatively muted thus far.

Sunday, March 12, 2017

Video: Steady State In SFC Models


A video discussing what "steady state" means in the context of Stock-Flow Consistent models.

It uses a tool that allows users to examine the time series created by the sfc_models package. It's not yet incorporated into sfc_models; the code used in the video currently will not run unless you install the latest source code from GitHub. The GUI is in the brianr747/sfc_gui repository.