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A benchmark Ecological Stock-Flow-Consistent Input-Output model for Denmark

Author

Listed:
  • Simon Fløj Thomsen
  • Hamid Raza
  • Mikael Randrup Byrialsen

Abstract

This paper aims to develop an ecological macroeconomic model for the Danish economy that can link the economic and financial system with some key aspects of the climate. To do so, we combine Stock-flow-Consistent approach (SFC) with Input-Output tables (IO) to build a hybrid model, which we call Ecological Stock-Flow-Consistent Input-Output model (E-SFC-IO). Most parameters of the model are estimated using time series data from 1995 to 2019, after which, we carry out simulations. We find that the model (with some minor adjustments) can replicate the dynamics of our key variables pertaining to the economy, financial system, and climate. To further validate the model, we analyse the response of the economy to various shocks, finding that it can capture the stylised facts. The model offers a foundation for providing a reasonable assessment of the climate policies to the relevant stakeholders.

Suggested Citation

  • Simon Fløj Thomsen & Hamid Raza & Mikael Randrup Byrialsen, 2025. "A benchmark Ecological Stock-Flow-Consistent Input-Output model for Denmark," FMM Working Paper 114-2025, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    • Handle: RePEc:imk:fmmpap:114-2025
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    References listed on IDEAS

    as
    1. Jackson, Andrew & Jackson, Tim, 2021. "Modelling energy transition risk: The impact of declining energy return on investment (EROI)," Ecological Economics, Elsevier, vol. 185(C).
    2. Asjad Naqvi, 2015. "Modeling Growth, Distribution, and the Environment in a Stock-Flow Consistent Framework. WWWforEurope Policy Paper No. 18," WIFO Studies, WIFO, number 57883.
    3. Naqvi, Syed Ali Asjad, 2015. "Modeling Growth, Distribution, and the Environment in a Stock-Flow Consistent Framework," Ecological Economic Papers 2, WU Vienna University of Economics and Business.
    4. Bhaduri, Amit & Marglin, Stephen, 1990. "Unemployment and the Real Wage: The Economic Basis for Contesting Political Ideologies," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 14(4), pages 375-393, December.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Empirical Stock Flow consistent models; Input-Output modelling; Ecological macroeconomics; Denmark;
    All these keywords.

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure

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