ABSTRACT
Introduction In recent years stock-flow consistent Keynesian models have received increasing attention. Typically applying simulation of difference/differential equations, this strand of literature focus on long run equilibria. Although unsatisfactory from a Keynesian point of view, Dos Santos and Zezza (2008: 472) argue that short run dynamics, e.g. in the form of unsatisfied expectations, is too complex to handle within formal models of “complete” monetary economies. Agent-based models, however, pose an alternative to mathematical equations, while retaining the ability to model complete monetary economies. When an almost stock-flow consistent approach is chosen here, it is not due to limitations in the method applied, but a positive choice of diverging from the usual accounting principles of stockflow consistent modelling, in order to capture what is regarded as essential dynamics in the interaction between real and financial spheres. The model is almost stock-flow consistent – following the path of e.g. Godley and Lavoie (2007) and Dos Santos (2006), but choosing the micro-convention of equity revaluations rather than following the macroeconomic convention (Patterson 1990). This option is crucial since it undermines the long period equilibria of stock-flow consistent Keynesian models, and allows finance a more decisive role. In the following we shall employ a three-step analysis; first we shall present the macrofoundation of Keynes in the terminology of stock-flow consistent modelling, next we shall discuss his microfoundation and finally we shall attempt to unify the two in an agent-based computational model. Experiments are performed on some of the behavioural parameters of the model relating stock and flow magnitudes.
