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Taking Godley's Ratios Seriously

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  • Fabrício Pitombo Leite

Abstract

type="main"> This article derives the three ratios employed by Wynne Godley to argue that they can express a full stock-flow consistent model. The strategy adopted here intends to explain the theoretical consequences of including the stock of wealth in a basic Keynesian scheme. It is demonstrated that the same steady-state level of income emerges whether we treat private investment as an exogenous variable or we treat it as totally endogenous. It is also demonstrated that stability conditions and the possible patterns of a path approaching this steady-state level can be examined before simulations.

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  • Fabrício Pitombo Leite, 2015. "Taking Godley's Ratios Seriously," Metroeconomica, Wiley Blackwell, vol. 66(3), pages 508-533, July.
    • Handle: RePEc:bla:metroe:v:66:y:2015:i:3:p:508-533
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    File URL: http://hdl.handle.net/10.1111/meca.12077
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    1. Yannis Dafermos, 2018. "Debt cycles, instability and fiscal rules: a Godley–Minsky synthesis," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 42(5), pages 1277-1313.
    2. Lídia Brochier & Antonio Carlos, 2019. "A supermultiplier Stock-Flow Consistent model: the “return” of the paradoxes of thrift and costs in the long run?," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 43(2), pages 413-442.

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