Effect Of Involvement Charge Per Unit Of Measurement Rises Inwards Uncomplicated Sfc Models

The involvement charge per unit of measurement is raised at t=5, causing output to rise.

This article volition live on unfortunately brief. I started working on an adding fiscal property markets to my Python Stock-Flow Consistent (SFC) Model library, too I was ambushed past times diverse bugs. (As diverse economists receive got remarked, it is a bad regard to mix upwards stocks too flows.) It looks similar the code is working, but I nonetheless desire to expect over the results earlier making longer commentary. However, the code did reproduce ane of the distinctive implications of SFC models: raising the charge per unit of measurement of involvement increases national production (in nominal terms, at least).

The final result -- which is presumably heretical alongside fundamental bankers -- follows from the fiscal flow effects of the involvement charge per unit of measurement hike. In the nautical chart above, the involvement charge per unit of measurement starts at 0%, too and thence in that place is a charge per unit of measurement hike inwards the 5th fourth dimension period.

The model is only about other modification of model SIM from Godley too Lavoie's Monetary Economics, but I added inwards a novel fiscal property -- Treasury bills. (Technically, I refer to them every bit deposits inwards the code, every bit they follow a deposit pricing convention, non the discount pricing that Treasury bills use.) The model is presumably similar to model PC from Monetary Economics, but I receive got left the regime sector consolidated for now. (Model PC breaks the regime into the Treasury too Central Bank.)

The driver of increased growth is the fact that regime spending drives the model, too an increment inwards the involvement charge per unit of measurement increases involvement spending. The increased deficit implies that solid sector fiscal assets volition increase. (The property holdings are carve upwards betwixt interest-paying deposits, too money, which pays no interest. Yes, I labelled that property every bit "money" inwards my code, fifty-fifty though I should receive got labelled it "currency.")

The model makes no endeavour to receive got into employment organisation human relationship whatever behavioural changes caused past times higher involvement rates (which is what causes criterion mainstream analysis to debate that involvement charge per unit of measurement hikes irksome activity). We would require a to a greater extent than sophisticated model to properly bargain with that debate, too I am currently ramping upwards my modelling framework to receive got on questions similar that.

Too Many @%$* Equations

The employment with SFC models is that they receive got every bit good many equations. However, this reflects the reality that the number of inter-connections alongside multiple sectors too markets explodes every bit nosotros add together to model complexity. However, nosotros require to add together that complexity if nosotros want to capture interesting phenomena.

In the electrical current instance, the number of equations made it hard to rails downward the issues with my machine-generated equations. However, straightaway that it looks similar the fiscal markets receive got been properly integrated, I receive got dealt with ane of the few remaining organisation generation issues. Going forward, the solely areas of concern I receive got involve adding to a greater extent than sophisticated equation solution techniques.


(c) Brian Romanchuk 2016