Selected essays from the eminent economist, Wynne Godley, tracing the development of his work and illuminating the key theories and models that made his name. Essays focus not only on the stock-flow coherent approach, but also lay out Godley's views about the European Union and the stability of its monetary policy.

The past few decades have witnessed the emergence of economic imbalances at the world level and within the euro zone. The failure of mainstream economics to accurately predict financial crises, or model the effects of finance-led growth, highlights the need for alternative frameworks. A key text, Global Imbalances and Financial Capitalism: Stock-Flow-Consistent Modelling demonstrates that Stock-Flow-Consistent models are well adapted to study this growth regime due to their ability to analyse the real and financial sides of the economy in an integrated way. This approach is combined with an analysis of exchange rate misalignments using the Fundamental Equilibrium Exchange Rate (FEER) methodology, which serves to give a synthetic view of international imbalances. Together, these models describe how global and regional imbalances are created, as well as suggest appropriate tools through which they may be reduced. The book also considers alternative economic policies in the euro zone (international risk sharing, fiscal federalism, eurobonds, European investments, a multispeed euro zone) alongside alternative monetary policies. In particular, it examines the possibilities of using SDR (Special Drawing Rights) as a reserve asset to be issued to fight a global recession, to support the development of low-income countries, or as an anchor to improve global monetary stability. This text will be of interest to students, scholars, and researchers of economic theory and international monetary economics. It will also appeal to professional organisations who supervise international relations.

Orthodox macroeconomics is founded on microeconomics. Heterodox economists either reject micro foundations or experiment with behavioural relationships without paying attention to the principles that generate them. The book takes off from Michal Kalecki’s aphorism about economics being a science that confused stocks and flows. Kalecki was famous for presiding over a marriage between Marx and Keynes and all three figure prominently in the volume. However, the first part of the title is a homage to Wynne Godley who pioneered stock-flow-consistent modeling in our times. The authors exploit lagged values of variables emerging from the definitions. Lags also emerge in so-called stock-flow norms connecting the aggregates. Some moving and shaking of identities and a difference or differential equation emerges. The requirements for stability of the dynamic systems are illuminating and the reader can stop at structure and history with the first half of the book. The conversation with orthodoxy begins with the second part. The equivalent equation systems of the first part throw up different pairs of characters whose happiness must be maximised over time. The price to pay through the solution process is the confrontation with many ugly expressions but the explicit calculations are undertaken repeatedly only to reassure students through drillwork that tedium is not the same as difficulty. The payoffs are that variable transitions in capitalism (the second part of the title) are captured from a small clutch of identities. The movements from backward agriculture to capitalism, from ‘golden age’ capitalism to ‘financialization’, are modeled. A separate chapter is devoted to Europe. The policy prescriptions of heterodox economics do not compare with the richness of critique and positive analysis. ‘Positive’ and ‘normative’ are one in this work, the combination of stock-flow norms along with ‘forgotten’ policy variables like the tax rate promising order and stability to economies.

A collection of papers from leading thinkers to celebrate the work of the late Wynne Godley, and his enormous contribution to the field of monetary economics. Chapters include in-depth discussions of the revolutionary economic modelling systems that Godley introduced, as well as his prescient concerns about the global financial crash.

This book challenges the mainstream paradigm, based on the inter-temporal optimisation of welfare by individual agents. It introduces a methodology for studying how institutions create flows of income, expenditure and production together with stocks of assets and liabilities, thereby determining how whole economies evolve through time.

This book challenges the mainstream paradigm, based on the inter-temporal optimisation of welfare by individual agents. It introduces a methodology for studying how it is institutions which create flows of income, expenditure and production together with stocks of assets and liabilities, thereby determining how whole economies evolve through time.