FALSTAFF:

Towards an ecological macro-economics

 

Working together over the last four years, Tim Jackson and Peter Victor have begun to develop a consistent approach to an ecological macroeconomics. Our broad approach draws together three primary spheres of modelling interest and explores the interactions between them. These spheres of interest are:

 

1. the ecological and resource constraints on economic activity;
2. a full account of production, consumption, employment and public finances in the ‘real economy’ at the level of the nation state;
3. a comprehensive account of the money economy, including the main interactions between financial agents, and the creation, flow and destruction of the money supply itself.

 

In order to explore these aspects of the economy we have developed a dedicated system dynamics model of Financial Assets and Liabilities in a Stock-Flow consistent Framework (FALSTAFF). FALSTAFF contains a simplified representation of the real economy and a comprehensive (stylized) account of the financial economy. We have several specific aims for FALSTAFF:

 

• to illustrate the real and financial implications of the shift towards green investment;
• to develop a coherent financial architecture in the context of shifting investment patterns;
• to explore monetary reform to facilitate the transition to a sustainable economy; and
• to test the viability of a transition to a stationary (non-growing economy)

 

A simplified form of the FALSTAFF model has been used to explore the hypothesis that interest-bearing money creates a ‘growth imperative’.  A working paper and online model are available here.

 

​