We aim to investigate the stability of various stock-flow consistent economic models,
and the potential causes for economic collapse therein. Through parameter sensitivity
analysis, we study models that feature a public sector, an active central bank, and
a household sector with independent consumption. Our final, most comprehensive
economic system combines all of the intricacies of each model, prominently featuring
a demand-driven economy that is stabilized by an expansionary monetary policy. In
addition, we incorporate a climate module for each economic system, and analyze
public sector intervention through carbon taxes and abatement subsidies. We find
that the most common feature of economic instability is a lack of demand, driven by
decreases in capital investment from firms, as well as a decline in household consumption. In order to maintain a stable growth path and prevent a permanent economic
contraction, we propose the implementations of an expansionary monetary policy,
increased public sector subsidies of abatement costs, and stricter carbon taxes. / Thesis / Master of Science (MSc)
| Identifer | oai:union.ndltd.org:mcmaster.ca/oai:macsphere.mcmaster.ca:11375/26810 |
| Date | January 2021 |
| Creators | Presta, Daniel M. |
| Contributors | Grasselli, Matheus R., Bolker, Benjamin M., Mathematics and Statistics |
| Source Sets | McMaster University |
| Language | English |
| Detected Language | English |
| Type | Thesis |
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