White Rose University Consortium logo
University of Leeds logo University of Sheffield logo York University logo

Three essays on open-economy Stock-Flow Consistent Models

Carnevali, Emilio (2019) Three essays on open-economy Stock-Flow Consistent Models. PhD thesis, University of Leeds.

This is the latest version of this item.

[img] Text
Carnevali_Economics__PhD_2019.PDF.pdf - Final eThesis - complete (pdf)
Restricted until 1 February 2025.

Request a copy

Abstract

This thesis is focused on open-economy Stock-Flow Consistent (SFC) models, following the methodology pioneered by the American economist James Tobin (1918-2002) and the British economist Wynne Godley (1926-2010). In order to justify the choice of this approach, the first chapter presents a summary of the debate on the ‘state of macro’ as it developed after the financial crisis of 2007-2008. It also provides some arguments on why Stock-Flow Consistent models have emerged in recent years as a credible and relatively popular alternative to ‘mainstream’ Dynamic Stochastic General Equilibrium (DSGE) models. Chapters 2, 3 and 4 of the thesis cover the following topics: 1) A comparison between a benchmark ‘mainstream’ open economy model and a ‘standard’ SFC open economy model; 2) The mathematical demonstration of a new condition that should hold to have an improvement of the trade balance following a depreciation of the currency. It is argued that the classical Marshall-Lerner condition cannot be considered a ‘useful approximation’ in the context of SFC open economy models; 3) The explanation of the ‘paradox of sticky prices’ in SFC open economy models, for which the lower is sensitivity of prices to change in exchange rates, the higher is the speed of adjustment to negative shocks of external position; 4) A review of the most recent developments of the SFC literature, with particular attention to open economy SFC models; 5) The presentation of two original SFC two-country models. The first is used to test the implications of productivity equations inspired by the so-called Verdoorn-Kaldor law (Verdoorn 1949, 1980, Kaldor 1966). The second introduces a new ‘closure’ for the flexible exchange rate regime based on a pure ‘balance of payment approach’ and a double redundant equation. The new ‘closure’ is combined with a more advanced representation of the financial system and emulative behaviours inspired by the ‘relative income’ hypothesis of Duesenberry (1949). Then the model is employed to study the relationship between financialization and distributional issues within a SFC open-economy framework.

Item Type: Thesis (PhD)
Keywords: Balance of Payments, Trade Imbalance, Sticky Prices, Productivity, Simulation
Academic Units: The University of Leeds > Leeds University Business School
Depositing User: Emilio Carnevali
Date Deposited: 07 Feb 2020 12:11
Last Modified: 07 Feb 2020 12:11
URI: http://etheses.whiterose.ac.uk/id/eprint/25736

Available Versions of this Item

Please use the 'Request a copy' link(s) above to request this thesis. This will be sent directly to someone who may authorise access.
You can contact us about this thesis. If you need to make a general enquiry, please see the Contact us page.

Actions (repository staff only: login required)