Berlin 2015 – scientific programme
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SOE: Fachverband Physik sozio-ökonomischer Systeme
SOE 22: Economic Models
SOE 22.1: Talk
Thursday, March 19, 2015, 15:00–15:15, MA 001
A Stock-Flow Consistent Input-Output Model with Applications to Energy Price Shocks and Interest Rates — •Oliver Richters1,2, Matthew Berg3, and Brian Hartley4 — 1Theoretical Physics / Complex Systems, Institute for Chemistry and Biology of the Marine Environment, Carl von Ossietzky University Oldenburg — 2Sustainable Money Research Group — 3University of Missouri Kansas City — 4The New School for Social Research
By synthesizing Stock-Flow Consistent (SFC) models, Input-Output (IO) models, and aspects of Ecological macroeconomics, a method is developed to simultaneously model monetary flows through the financial system, flows of produced goods and services through the real economy, and flows of physical materials through the natural environment. We highlight the linkages between the physical environment and the economic system by emphasizing the role of the energy industry. First, the model is applied to analyze the role of energy price shocks in contributing to recessions, incorporating several propagation and amplification mechanisms. Second, it is demonstrated that contrary to some claims, 0% interest rates are not a necessary condition for a stationary economy in stock-flow equilibrium, although this does not necessarily imply that the economy is also ecologically sustainable. Connections to econophysics are emphasized.