The current sovereign debt crisis is widely believed to have been caused by insufficient budget discipline. However, the financial sector accounts reveal that public as well as private borrowing in the euro area was dwarfed by the synchronised explosion of assets and liabilities of financial...

This paper presents evidence that macroeconomic accounting models helped to anticipate the credit crisis and economic recession, whereas equilibrium models, ubiquitous in mainstream policy and research, did not. This study traces the intellectual pedigree of the accounting approach as an...

The crisis has exposed the failure of economic models to deal sensibly with endogenously generated crises propagating from the financial sectors to the real economy, and back again. The goal of this paper is to review the method of stock flow consistent modeling to highlight areas in which it is...