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Stock-and-flow-consistent macroeconomic model for South Africa

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  • Konstantin Makrelov
  • Channing Arndt
  • Rob Davies
  • Laurence Harris

Abstract

We develop a stock-and-flow-consistent model for South Africa with four financial instruments and detailed balance sheets for the household, government, financial, non-financial, and foreign sectors and the Reserve Bank. Though micro-founded, the model departs significantly from current dynamic stochastic general equilibrium models as it assumes bounded rationality and no Ricardian equivalence. The stock and flow consistency makes it better suited to studying balance sheet dynamics and the real sector/financial sector interaction. In the model, cyclical flow changes affect the long-term real and financial behaviour of institutions through their impact on the respective institutional assets and liabilities stocks.

Suggested Citation

  • Konstantin Makrelov & Channing Arndt & Rob Davies & Laurence Harris, 2018. "Stock-and-flow-consistent macroeconomic model for South Africa," WIDER Working Paper Series 007, World Institute for Development Economic Research (UNU-WIDER).
  • Handle: RePEc:unu:wpaper:wp2018-7
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    References listed on IDEAS

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    Cited by:

    1. Konstantin Makrelov & Channing Arndt & Rob Davies & Laurence Harris, 2018. "Fiscal multipliers in South Africa: The importance of financial sector dynamics," WIDER Working Paper Series 006, World Institute for Development Economic Research (UNU-WIDER).

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