A stock-flow-fund ecological macroeconomic model

Dafermos, Yannis; Nikolaidi, Maria and Galanis, Giorgos. 2017. A stock-flow-fund ecological macroeconomic model. Ecological Economics, 131, pp. 191-207. ISSN 0921-8009 [Article]

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Abstract or Description

This paper develops a stock-flow-fund ecological macroeconomic model that combines the stock-flow consistent approach of Godley and Lavoiewith the flow-fund model of Georgescu-Roegen. The model has the following key features. First, monetary and physical stocks and flows are explicitly formalised taking into account the accounting principles and the laws of thermodynamics. Second, Georgescu-Roegen's distinction between stock-flow and fund service resources is adopted. Third, output is demand-determined but supply constraints might arise either due to environmental damages or due to the exhaustion of natural resources. Fourth, climate change influences directly the components of aggregate demand. Fifth, finance affects macroeconomic activity and the materialisation of investment plans that determine ecological efficiency. The model is calibrated using global data. Simulations are conducted to investigate the trajectories of key environmental, macroeconomic and financial variables under (i) different assumptions about the sensitivity of economic activity to the leverage ratio of firms and (ii) different types of green finance policies.

Item Type:


Identification Number (DOI):



Ecological macroeconomics, Stock-flow consistent modelling, Laws of thermodynamics, Climate change, Finance

Departments, Centres and Research Units:

Institute of Management Studies


12 August 2016Accepted
14 September 2016Published Online
1 January 2017Published

Item ID:


Date Deposited:

13 Oct 2016 14:22

Last Modified:

29 Apr 2020 16:20

Peer Reviewed:

Yes, this version has been peer-reviewed.



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