The Tricky Question Of Matching Supply And Demand In SFC Models

One of the more challenging parts of developing my stock-flow consistent (SFC) models library was the question of how to match up supply and demand in a market. I generalised a technique used in Godley and Lavoie's Monetary Economics; I am still unsure whether there is a more general technique. [Update: I added some explanatory text.]

The Revenge Of Policy Uncertainty

Unless someone gets cold feet, the British government is expected to trigger Article 50 on Wednesday, starting the process of the United Kingdom leaving the European Union (EU). Although markets are not panicking about this move (yet), this obviously creates a great deal of fundamental uncertainty about the outlook for the British economy. I do not have any strong opinions on what this means for the United Kingdom, but I believe that the effects should be largely localised to that economy.

Latest Blowup Demonstrates Weakness Of DSGE Macro

The post "No Criticising Economics is not Regressive" by "Unlearning Economics" has once again re-awakened the macro wars. I am agnostic on the big picture story about economics in general, but the austerity corner of the debate highlights an obvious weakness of DSGE macro in particular: the mathematics that is used has not achieved what it set out to achieve.

Canadian Federal Government Rejoins Reality

Rick Salutin wrote an article that is popular in Modern Monetary Theory circles -- "Can we come out now that the deficit hysteria is over?" He describes how Finance Minister Bill Morneau made some sensible statements about the budget (and how that shocked the Canadian press corps). I am not going to go so far as to announce that the "Age of MMT" is upon us, but it is clear that "Harpernomics" is stone cold dead.

Can't Anybody Here Play This Game?

 The embarrassing inability of the Republicans to pass a health care bill has helped kill optimism about a "Trump boom" in the financial markets. My feeling was that it would not be that difficult for the Republicans to rally around tax cuts, but that may be too optimistic a reading of their legislative competence.

Video: Gold Standard And Austerity

Video explaining how austerity works in a Gold Standard model, as described in my previous post.

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.