A stock-flow consistent quarterly model of the italian economy

In this chapter, the authors show how to address the missing links between the real and financial sectors within a post-Keynesian framework, presenting a quarterly stock-flow consistent (SFC) structural model of the Italian economy. They set up the accounting structure of the sectoral transactions, describing the transaction matrix and balance sheet matrix, starting from the appropriate sectoral data sources. They describe their estimation strategy, present the main stochastic equations, and, finally, discuss the main channels of transmissions in the model.