We model a macroeconomy with stock flow consistent national accounts built from the local interactions of heterogenous agents (households, firms, bankers, and a government) through product, labor, and money markets in discrete time. We use this model to show that, without any restrictions on the...

The causes of the present crisis are largely to be found in the unregulated development of new financial products and in the over-expansion of the financial sector, in particular the shadow banking sector, which emerged precisely to avoid regulation. These changes led to lower risk perception,...

Recent debates over the changing volatility of the business cycle have concentrated on the possible effects of government policy, and have paid little attention to differences in the character of the economy in different periods. Yet its character has changed dramatically from pre-World War I to...