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Towards a Stock-Flow Consistent Ecological Macroeconomics
An overview of the FALSTAFF framework with some illustrative results

Working Paper

Authors: Peter Victor    Tim Jackson   

Published By: UNEP Inquiry   

Date: Aug 2015

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Towards a Stock-Flow Consistent Ecological Macroeconomics

This paper describes the challenge of modelling combined economic, ecological and financial systems and sets out a series of objectives for modelling the socio-economic transition towards sustainability. It highlights the modelling needs in relation to full employment, financial stability, and social equity under conditions of constrained resource consumption and ecological limits. It outlines the development of a dedicated system-dynamics model for describing Financial Assets and Liabilities in a Stock-Flow consistent Framework (FALSTAFF) and presents some hypothetical results calibrated for the Canadian economy. The selected scenarios illustrate the complex relationships between real and financial aspects of the macroeconomy and allow some initial tests on the financial viability of green investment.

[This paper was presented at the UNEP Inquiry/Centre for International Governance Innovation Academic Symposium on the Design of a Sustainable Financial System, held in Waterloo (Canada) in December 2014]
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