IDEAS home Printed from
   My bibliography  Save this article

Financialisation Issues in a Post-Keynesian Stock-flow Consistent Model


  • Marc Lavoie

    () (Department of Economics, University of Ottawa)


This paper presents a stock-flow consistent growth model which is set in the Post-Keynesian tradition. A key feature of the model, however, is that real government expenditures grow at a rate which is compatible over the long period with a constant rate of unemployment (at the "natural rate of growth"). The model incorporates a detailed description of the household, production, banking and government sectors. This paper focuses on changes in parameters that are tied with financialization. The effects on the following changes are examined: the target proportion of retained earnings to investment, the proportion of profits distributed as dividends, the propensity of households to hold equities, and the propensity of households to take new loans as a proportion of their personal income. There is also a short analysis of the impact of a change in the loan repayment ratio and in the loan default ratio.

Suggested Citation

  • Marc Lavoie, 2008. "Financialisation Issues in a Post-Keynesian Stock-flow Consistent Model," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 5(2), pages 331-356.
  • Handle: RePEc:elg:ejeepi:v:5:y:2008:i:2:p:331-356

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. Catherine Mathieu & Henri Sterdyniak, 2003. "Réformer le pacte de stabilité : l'état du débat," Revue de l'OFCE, Presses de Sciences-Po, vol. 84(1), pages 145-179.
    2. Charles Wyplosz, 2006. "European Monetary Union: the dark sides of a major success," Economic Policy, CEPR;CES;MSH, vol. 21(46), pages 207-261, April.
    3. Gilles Saint-Paul, 2004. "Why are European Countries Diverging in their Unemployment Experience?," Journal of Economic Perspectives, American Economic Association, vol. 18(4), pages 49-68, Fall.
    4. Romain Duval & Jørgen Elmeskov, 2005. "The Effects of EMU on Structural Reforms in Labour and Product Markets," OECD Economics Department Working Papers 438, OECD Publishing.
    5. Perotti, Roberto & Alesina, Alberto, 2004. "The European Union: A Politically Incorrect View," Scholarly Articles 4553004, Harvard University Department of Economics.
    6. Alberto Alesina & Roberto Perotti, 2004. "The European Union: A Politically Incorrect View," Journal of Economic Perspectives, American Economic Association, vol. 18(4), pages 27-48, Fall.
    7. Jacques Le Cacheux, 2005. "Politiques de croissance en Europe. Un problème d'action collective," Revue économique, Presses de Sciences-Po, vol. 56(3), pages 705-713.
    8. Alan Ahearne & Jean Pisani-Ferry, 2006. "The Euro: only for the agile," Policy Briefs 42, Bruegel.
    9. André Sapir, 2006. "Globalization and the Reform of European Social Models," Journal of Common Market Studies, Wiley Blackwell, vol. 44(2), pages 369-390, June.
    10. Lane, Philip R., 2006. "The Real Effects of EMU," CEPR Discussion Papers 5536, C.E.P.R. Discussion Papers.
    11. Nicholai Benalal & Juan Luis Diaz del Hoyo & Beatrice Pierluigi & Nikiforos Vidalis, 2006. "Output growth differentials across the euro area countries - some stylised facts," Occasional Paper Series 45, European Central Bank.
    12. Mongelli, Francesco Paolo & Vega, Juan Luis, 2006. "What effects is EMU having on the euro area and its member countries? An overview," Working Paper Series 599, European Central Bank.
    13. Servaas Deroose & Sven Langedijk & Werner Roeger, 2004. "Reviewing adjustment dynamics in EMU: from overheating to overcooling," European Economy - Economic Papers 2008 - 2015 198, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Detzer, Daniel, 2016. "Financialisation, debt and inequality: Scenarios based on a stock flow consistent model," IPE Working Papers 64/2016, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    2. Panico, Carlo & Pinto, Antonio, 2015. "Income distribution and the size of the financial sector," Centro Sraffa Working Papers CSWP15, Centro di Ricerche e Documentazione "Piero Sraffa".
    3. Setterfield, Mark, 2011. "Anticipations of the Crisis: On the Similarities between post-Keynesian Economics and Regulation Theory," Revue de la Régulation - Capitalisme, institutions, pouvoirs, Association Recherche et Régulation, vol. 10.
    4. Daniel Detzer, 2017. "Financialisation, Debt and Inequality: Export-led Mercantilist and Debt-led Private Demand Boom Economies in a Stock-flow consistent Model," Working Papers 2016-03, Universita' di Cassino, Dipartimento di Economia e Giurisprudenza.
    5. Hein, Eckhard & Dodig, Nina & Budyldina, Natalia, 2014. "Financial, economic and social systems: French Regulation School, Social Structures of Accumulation and Post-Keynesian approaches compared," IPE Working Papers 34/2014, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    6. Hein, Eckhard, 2011. "Distribution, ‘Financialisation’ and the Financial and Economic Crisis – Implications for Post-crisis Economic Policies," MPRA Paper 31180, University Library of Munich, Germany.
    7. Eckhard Hein, 2012. ""Financialization," distribution, capital accumulation, and productivity growth in a post-Kaleckian model," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 34(3), pages 475-496.
    8. Steve Keen, 2013. "Predicting the ‘Global Financial Crisis’: Post-Keynesian Macroeconomics," The Economic Record, The Economic Society of Australia, vol. 89(285), pages 228-254, June.
    9. Hein, Eckhard & Dodig, Nina, 2014. "Financialisation, distribution, growth and crises: Long-run tendencies," IPE Working Papers 35/2014, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    10. Eckhard Hein, 2012. "The Macroeconomics of Finance-Dominated Capitalism – and its Crisis," Books, Edward Elgar Publishing, number 14931.
    11. Engelbert Stockhammer & Ozlem Onaran, 2013. "Wage-led growth: theory, evidence, policy," Review of Keynesian Economics, Edward Elgar Publishing, vol. 1(1), pages 61-78, January.
    12. Hein, Eckhard, 2016. "Post-Keynesian macroeconomics since the mid-1990s: Main developments," IPE Working Papers 75/2016, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    13. repec:mes:postke:v:35:y:2012:i:2:p:187-213 is not listed on IDEAS
    14. repec:bla:metroe:v:68:y:2017:i:2:p:321-353 is not listed on IDEAS
    15. Eugenio Caverzasi, 2012. "From the Financial Instability Hypothesis to the theory of Capital Market Inflation: a structural interpretation of the sub-prime crisis," DEM Working Papers Series 018, University of Pavia, Department of Economics and Management.
    16. Eckhard Hein & Achim Truger, 2012. "Finance-dominated capitalism in crisis—the case for a global Keynesian New Deal," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 35(2), pages 187-213.
    17. Giorgos Argitis & Stella Michopoulou, 2013. "Studies in Financial Systems No 4 Financialization and the Greek Financial System," FESSUD studies fstudy04, Financialisation, Economy, Society & Sustainable Development (FESSUD) Project.

    More about this item


    financialization; growth; buffer stocks; disequilibria;

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian
    • O42 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Monetary Growth Models


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:elg:ejeepi:v:5:y:2008:i:2:p:331-356. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Katie Smith). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.