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A stock-flow-fund ecological macroeconomic model

Author

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  • Dafermos, Yannis
  • Nikolaidi, Maria
  • Galanis, Giorgos

Abstract

This paper develops a stock-flow-fund ecological macroeconomic model that combines the stock-flow consistent approach of Godley and Lavoie with the flow-fund model of Georgescu-Roegen. The model has the following key features. First, monetary and physical stocks and flows are explicitly formalised taking into account the accounting principles and the laws of thermodynamics. Second, Georgescu-Roegen’s distinction between stock-flow and fund-service resources is adopted. Third, output is demand-determined but supply constraints might arise either due to environmental damages or due to the exhaustion of natural resources. Fourth, climate change influences directly the components of aggregate demand. Fifth, finance affects macroeconomic activity and the materialisation of investment plans that determine ecological efficiency. The model is calibrated using global data. Simulations are conducted to investigate the trajectories of key environmental, macroeconomic and financial variables under (i) different assumptions about the sensitivity of economic activity to the leverage ratio of firms and (ii) different types of green finance policies.

Suggested Citation

  • Dafermos, Yannis & Nikolaidi, Maria & Galanis, Giorgos, 2015. "A stock-flow-fund ecological macroeconomic model," Greenwich Papers in Political Economy 14063, University of Greenwich, Greenwich Political Economy Research Centre.
  • Handle: RePEc:gpe:wpaper:14063
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    Cited by:

    1. repec:eee:ecolec:v:148:y:2018:i:c:p:15-21 is not listed on IDEAS
    2. Lamperti, F. & Dosi, G. & Napoletano, M. & Roventini, A. & Sapio, A., 2018. "Faraway, So Close: Coupled Climate and Economic Dynamics in an Agent-based Integrated Assessment Model," Ecological Economics, Elsevier, vol. 150(C), pages 315-339.
    3. D’Orazio, Paola & Popoyan, Lilit, 2019. "Fostering green investments and tackling climate-related financial risks: Which role for macroprudential policies?," Ecological Economics, Elsevier, vol. 160(C), pages 25-37.
    4. repec:elg:ejeepi:v:14:y:2017:i:2:p131-172 is not listed on IDEAS
    5. repec:eee:ecolec:v:146:y:2018:i:c:p:228-239 is not listed on IDEAS
    6. Yannis Dafermos & Maria Nikolaidi, 2019. "Fiscal policy and ecological sustainability: A post-Keynesian perspective," Working Papers PKWP1912, Post Keynesian Economics Society (PKES).
    7. Dafermos, Yannis & Nikolaidi, Maria & Galanis, Giorgos, 2018. "Climate Change, Financial Stability and Monetary Policy," Ecological Economics, Elsevier, vol. 152(C), pages 219-234.
    8. repec:eee:enepol:v:124:y:2019:i:c:p:355-370 is not listed on IDEAS
    9. Adam B. Barrett, 2017. "Stability of zero-growth economics analysed with a Minskyan model," Papers 1704.08161, arXiv.org, revised Nov 2017.
    10. repec:eee:ecolec:v:156:y:2019:i:c:p:121-133 is not listed on IDEAS
    11. repec:pal:compes:v:60:y:2018:i:1:d:10.1057_s41294-018-0055-7 is not listed on IDEAS
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    13. repec:eee:ecolec:v:162:y:2019:i:c:p:108-120 is not listed on IDEAS
    14. Gregor Semieniuk, 2018. "Energy in Economic Growth: Is Faster Growth Greener?," Working Papers 208, Department of Economics, SOAS, University of London, UK.
    15. Eckhard Hein, 2017. "Post-Keynesian macroeconomics since the mid 1990s: main developments," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 14(2), pages 131-172, September.
    16. repec:eee:ecolec:v:149:y:2018:i:c:p:239-253 is not listed on IDEAS
    17. Naqvi, Asjad & Stockhammer, Engelbert, 2018. "Directed Technological Change in a Post-Keynesian Ecological Macromodel," Ecological Economics, Elsevier, vol. 154(C), pages 168-188.
    18. Gregor Semieniuk & Mariana Mazzucato, 2018. "Financing Green Growth," Working Papers 210, Department of Economics, SOAS, University of London, UK.
    19. repec:eee:ecolec:v:152:y:2018:i:c:p:118-130 is not listed on IDEAS
    20. repec:eee:ecolec:v:147:y:2018:i:c:p:383-398 is not listed on IDEAS
    21. Mario Larch & Markus Löning & Joschka Wanner, 2017. "Can Degrowth Overcome the Leakage Problem of Unilateral Climate Policy?," CESifo Working Paper Series 6633, CESifo Group Munich.
    22. repec:eee:ecolec:v:153:y:2018:i:c:p:218-236 is not listed on IDEAS
    23. Matheus R Grasselli & Alexander Lipton, 2018. "The Broad Consequences of Narrow Banking," Papers 1810.05689, arXiv.org.
    24. repec:bla:jecsur:v:31:y:2017:i:5:p:1204-1239 is not listed on IDEAS
    25. Hardt, Lukas & O'Neill, Daniel W., 2017. "Ecological Macroeconomic Models: Assessing Current Developments," Ecological Economics, Elsevier, vol. 134(C), pages 198-211.

    More about this item

    Keywords

    ecological macroeconomics; stock-flow consistent modelling; laws of thermodynamics; climate change; finance;

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q57 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Ecological Economics

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