a b s t r a c tThe paper moves from a discussion of the challenges posed by the crisis to standard macroeconomics and the solutions adopted within the DSGE community. Although several recent improvements have enhanced the realism of standard models, we argue that major drawbacks still undermine their reliability. In particular, DSGE models still fail to recognize the complex adaptive nature of economic systems, and the implications of money endogeneity. The paper argues that a coherent and exhaustive representation of the inter-linkages between the real and financial sides of the economy should be a pivotal feature of every macroeconomic model and proposes a macroeconomic framework based on the combination of the Agent Based and Stock Flow Consistent approaches. The papers aims at contributing to the nascent AB-SFC literature under two fundamental respects: first, we develop a fully decentralized AB-SFC model with several innovative features, and we thoroughly validate it in order to check whether the model is a good candidate for policy analysis applications. Results suggest that the properties of the model match many empirical regularities, ranking among the best performers in the related literature, and that these properties are robust across different parameterizations. Second, the paper has also a methodological purpose in that we try to provide a set or rules and tools to build, calibrate, validate, and display AB-SFC models.& 2016 Elsevier B.V. All rights reserved. Is the economic crisis a crisis for macroeconomics?More than eight years since the onset of the global financial crisis we are still assessing how the crisis should change our view about macroeconomics. The crisis cast serious doubts on the plausibility of standard macroeconomic models -in particular of dynamic stochastic general equilibrium (DSGE) models -and their ability to provide effective policy advices to prevent the occurrence of large-scale economic turmoils, and to tackle their consequences.In a nutshell, the anatomy of the standard DSGE model presents an economy composed of different types of representative agents, such as households and firms, maximizing in a infinite lifetime horizon an objective function subject to an inter-temporal budget constraint. The first order conditions yield a fully state-contingent plan for the representative agents

The paper moves from a discussion of the challenges posed by the crisis to standard macroeconomics and the solutions adopted within the DSGE community. Although several recent improvements have enhanced the realism of standard models, we argue that major drawbacks still undermine their reliability. In particular, DSGE models still fail to recognize the complex adaptive nature of economic systems, and the implications of money endogeneity. The paper argues that a coherent and exhaustive representation of the inter-linkages between the real and financial sides of the economy should be a pivotal feature of every macroeconomic model and proposes a macroeconomic framework based on the combination of the Agent Based and Stock Flow Consistent approaches. The papers aims at contributing to the nascent AB-SFC literature under two fundamental respects: first, we develop a fully-decentralized AB-SFC model with several innovative features, and we thoroughly validate it in order to check whether the model is a good candidate for policy analysis applications. Results suggest that the properties of the model match many empirical regularities, ranking among the best performers in the related literature, and that these properties are robust across different parameterizations. Second, the paper has also a methodological purpose in that we try to provide a set or rules and tools to build, calibrate, validate, and display AB-SFC models.Keywords: Agent Based Macroeconomics, Stock Flow Consistent Models, Business Cycles, Bank Regulation.JEL Codes: E03, E32, O30 * Corresponding author: a.caiani@eco.univpm.it. This research was supported by the Institute for New Economic Thinking (INET) and the FP7 project MatheMACS. Our work has greatly benefited from comments and suggestions received from other scholars. We are grateful to the participants of the 2014 Workshop of the INET AB-SFC Macroeconomic Program at Monte Conero (Ancona, Italy). A special thanks goes to Steve Phelps for the support he gave us while developing the JMAB platform. We thank our colleagues Ermanno Catullo, Annarita Colasante, Federico Giri, Ruggero Grilli, Antonio Palestrini, Luca Riccetti, Alberto Russo, Gabriele Tedeschi, and Sean Ryan who provided insight and expertise that greatly assisted the research. Finally, we are grateful to the three anonymous referees for their valuable suggenstions that contributed to significantly improve the manuscript. All remaining errors are ours. Is the economic crisis a crisis for Macroeconomics?More than eight years since the onset of the global financial crisis we are still assessing how the crisis should change our view about macroeconomics. The crisis cast serious doubts on the plausibility of standard macroeconomic models -in particular of dynamic stochastic general equilibrium (DSGE) models -and their ability to provide effective policy advices to prevent the occurrence of large-scale economic turmoils, and to tackle their consequences.In a nutshell, the anatomy of the standard DSGE model presents an economy composed ...

The aim of the paper is to provide an overview of the current stock-flow-consistent (SFC) literature. Indeed, we feel the SFC approach has recently led to a blossoming literature, requiring a new summary after the work of Dos Santos and above all after the publication of the main reference work on the methodology, Godley and Lavoie's Monetary Economics: An Integrated Approach to Credit, Money, Income, Production and Wealth. The paper is developed along the following lines. First, a brief historical analysis investigates the roots of this class of models that can be traced as far back as 1949 and the work of Copeland. Second, the competing points of view regarding some of its main controversial aspects are underlined and used to classify the different methodological approaches followed in using these models. Namely, we discuss (i) how the models are solved, (ii) the treatment of time and its implication and (ii) the need (or not) for microfoundations. These results are then used in the third section of the paper to develop a bifocal perspective, which allows us to divide the literature reviewed according to both its subject and the methodology. We explore various topics such as financialisation, exchange rate modelling, policy implication, the need for a common framework within the post-Keynesian literature and the empirical use of SFC models. Finally, the conclusions present some hypotheses (and wishes) for the possible lines of development of SFC models.