A New, Simple SFC Open Economy Framework

The paper presents a simple Stock-Flow Consistent open economy model with flexible exchange rates. It can reproduce the same dynamics and results of rates ‘benchmark’ by Godley Lavoie [2007b. Monetary Economics: An Integrated Approach to Credit, Money, Income, Production Wealth. London, UK: Palgrave MacMillan]. latter is considered ‘centre gravity’ SFC literature. Yet new uses only one-third equations original one features different mechanism determination rate. Its small size its flexibility make suitable both for didactic purposes extensions further building blocks address variety research topics.