An integrated systems approach to macroeconomic modeling: Stock-flow consistent accounting and the dynamics of interaction between the real and financial economy

We develop in this dissertation an integrated, flexible system of macroeconomic accounting and modeling. The hallmark of the system is that its accounting framework is stock-flow consistent, meaning that it accounts exhaustively for all stocks of assets in the economy, and that it connects every asset to corresponding flows of property income, investment and holding gains. The accounting system takes the form of an interrelated set of social accounting matrices (SAMs), into which stocks and flows of funds are fitted as continuous-time variables. The nominal value of each variable is decomposed into prices and volumes in a way that secures consistency in aggregation as well as "self-duality" (i.e., that prices x volumes = nominal values). This is accomplished by means of Divisia integral chain indices.; The accounting framework is brought to life by a set of differential equations describing the economic behavior of the agents of the model economy. These equations can be specified in different ways in order to achieve different "closures" of the model, subject to the same set of accounting restrictions. The model featured in the dissertation serves mainly as an example of how this can be done; it is not intended as a conclusive statement about the "right" way to model an economy.; The distinguishing feature of the modeling system is that the behavioral specifications are cast in terms of growth rates and "contributions to growth" rather than levels of prices and volumes. Levels are obtained through numerical evaluation of the integrals of the growth rates. The resulting integrals are path-dependent and thus not expressible in closed form. This novel approach secures consistency between the model and the underlying data, in the sense that both are based on the chain-index principle, in line with recent official statistical practice.