Working Paper

Method to simultaneously determine stock, flow, and parameter values in large stock flow consistent models

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Stock flow consistent macroeconomic models suffer from the lack of a coherent estimation method due to the complicated nature of the modeling process.

This paper provides a candidate estimation method that determines the values of each stock and flow simultaneously by analytically solving any stock flow model, and converting the estimation into a global minimisation problem in p-k dimensions. We describe the method and apply it to a canonical model using real-world data. The method estimates the parameters and flows reliably.