Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/178651
Authors: 
Richters, Oliver
Glötzl, Erhard
Year of Publication: 
2018
Series/Report no.: 
Oldenburg Discussion Papers in Economics V-409-18
Abstract: 
In monetary Stock-Flow Consistent (SEC) models, accounting identities reduce the number of behavioral functions to avoid an overdetermined system of equations. We relax this restriction using a differential-algebraic equation framework of constrained dynamics. Agents exert forces the variables according to their desire, for instance to gradually improve their utility. The parameter "economic power" corresponds to their ability to assert their interest. In analogy to Lagrangian mechanics, system constraints generate additional constraint forces that lead to unintended dynamics. We exemplify the procedure using a simple SEC model and reveal its implicit assumptions about power relations and agents' preferences.
Subjects: 
Economic models
Disequilibrium Dynamics
Stock-Flow Consistent Models
Post Keynesian
Constrained Dynamics
Lagrangian Mechanics
Procedural Rationality
JEL: 
B22
C30
C63
E12
E16
E17
Document Type: 
Working Paper
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