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Title: Stocks, flows, and uncertainty : critical problems in the stock flow consistent approach to monetary economics
Author: Meadway, James
Awarding Body: SOAS University of London
Current Institution: SOAS, University of London
Date of Award: 2013
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This thesis presents a critique of the increasingly popular post-Keynesian stock-flow consistent (SFC) approach to macroeconomic modelling. With the Godley-Lavoie (2007) textbook taken as the paradigmatic treatment, it explores the claims of SFC to provide both a complete and coherent means to analyse and model any modern economy. It finds that the presence of uncertainty in firms' decision-making renders the system inconsistent with either rational behaviour on the part of firms, or SFC's wider claims to rigorous consistency conditions being met. Once uncertainty of this kind is introduced, we find a line of transmission from the real economy back into the monetary system that conventional SFC models cannot cope with. Building on this, the thesis presents the role of capital and initial financing as fundamental problems within the SFC framing, resulting also in monetary imbalances. We suggest that drawing on the classical political economy and its understanding of the hoarding of money with the circuit of accumulation can help resolve some of these difficulties. The thesis concludes with an exploration of the shadow banking system in light of the preceding discussion.
Supervisor: Not available Sponsor: Not available
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral