EViews macros for building models in
Wynne Godley and Marc Lavoie
Monetary Economics: An Integrated Approach to Credit, Money, Income, Production and Wealth

Table of contents Chapter 10 Notes on EViews version Notation Copyright Comments Guestbook

Chapter 10. A Model with both Inside and Outside Money

Model INSOUT - Model INSOUT version 2

Model INSOUT

Model INSOUT puts together all sectors analyzed in the previous models.
Since the model is rather complex, and it is analyzed in detail through several different exercises, we have produced separate macros for separate tasks.

Download: gl10insout (Eviews 5 to 8) or gl10insout_v4 (Eviews 4.1)

Download the macro above to generate a baseline solution. Then choose one (or maybe all) of the macros below to replicate exercises in the book.

Note that the macro INSOUT.PRG contains some inactive equations for alternative versions of the model. For instance, you may want to switch to asset demand functions governed by nominal interest rates by activating the corresponding equations, and deactivating the current equations where asset demands depend on real rates.

List of all variables in model INSOUT
ENDOGENOUS VARIABLES EXOGENOUS VARIABLES AND PARAMETERS
A_D Eq72 Demand for Central bank advances from commercial banks ER_RBL Expected rate of return on long term bonds
A_S Eq62 Supply of Central bank advances to commercial banks G_K Real government expenditures
B_BD Eq74 Government bills demanded by commercial banks N_FE Full Employment level
B_BDN Eq70 Notional demand for government bills from commercial banks PR Labour productivity
B_CB Eq60 Government bills held by Central bank R_B_BAR Interest rate on bills - set exogenously
B_HD Eq38 Demand for government bills R_BL_BAR Interest rate on bonds - set exogenously
B_HH Eq44 Government bills held by households  
B_S Eq54 Supply of government bills BOT Bottom value for bank net liquidity ratio
BL_D Eq39 Demand for government bonds TOP Top value for bank net liquidity ratio
BL_H Eq45 Government bonds held by households BOTPM Bottom value for bank profit margin
BL_S Eq55 Supply of government bonds TOPPM Top value for bank profit margin
BLR Eq75 Gross bank liquidity ratio  
BLR_N Eq71 Net bank liquidity ratio αi Par. influencing consumption
BPM Eq85 Banks β Par. in expectation formations on real sales
C_K Eq30 Real consumption ε Par. in expectation formations on real disposable income
CG Eq22 Capital gains on government bonds γ Speed of adjustment of inventories to the target level
CONS Eq32 Consumption at current prices λij Par. in households demand for financial assets
F Eq24 Realized profits of firms and banks ω1,2 Par. influencing the target real wage for workers
F_B Eq81 Realized banks profits ω3 Speed of adjustment of wages to target value
F_CB Eq64 Central bank φ Mark-up on unit costs
F_F Eq19 Realized firms profits ρi Reserve requirement parameters
F_F_E Eq12 Expected profits of firms σi Par. determining the target inventories to sales ratio
G Eq52 Government expenditures τ Sales tax rate
H_BD Eq69 Cash required by banks ξb Par. influencing the interest rate on deposits
H_BS Eq59 Cash supplied to banks ξl Par. influencing the interest rate on loans
H_HD Eq35 Households demand for cash  
H_HH Eq43 Cash held by households  

Download:
H_HS Eq65 Cash supplied to households  

gl10insout (Eviews 5 to 8) or
H_S Eq58 Total supply of cash  

gl10insout_v4 (Eviews 4.1)
IN Eq17 Stock of inventories at current costs  

 
IN_K Eq15 Real inventories  

to generate a baseline solution.
IN_K_E Eq9 Expected real inventories  
IN_K_T Eq6 Target level of real inventories  

Download:
L_D Eq18 Demand for loans  

insout.wf1
L_S Eq68 Supply of loans  

if you want the complete Eviews workfile.
M1_H Eq47 Checking deposits held by households  
M1_HN Eq46 Notional holdings of checking deposits  
M1_S Eq66 Checking deposits supplied by banks  
M2_D Eq37 Demand for term deposits - constrained to be non-negative  
M2_H Eq49 Term deposits held by households  
M2_S Eq67 Term deposits supplied by banks  
N Eq2 Employment level  
NHUC Eq11 Normal historic unit costs  
ωT Eq86 Target real wage for workers  
P Eq10 Price level  
P_BL Eq56 Price of government bonds  
π Eq20 Price inflation  
PSBR Eq53 Government deficit  
R_A Eq63 Interest rate on Central bank advances  
R_B Eq61 Interest rate on government bills  
R_BL Eq57 Interest rate on bonds  
R_L Eq82 Interest rate on loans  
R_M Eq76 Interest rate on deposits  
RR_B Eq41 Real interest rate on bills  
RR_BL Eq42 Real interest rate on long term bonds  
RR_L Eq8 Real interest rate on loans  
RR_M Eq40 Real interest rate on term deposits  
S Eq14 Sales at current prices  
S_K Eq13 Real sales  
S_K_E Eq5 Expected real sales  
σS Eq16 Realized inventories to sales ratio  
σT Eq7 Target inventories to sales ratio  
T Eq51 Taxes  
UC Eq4 Unit costs  
V Eq25 Wealth of households  
V_E Eq34 Expected households wealth  
V_K Eq29 Real wealth of households  
V_NC Eq26 Wealth of households, net of cash  
V_NC_E Eq36 Expected wealth of households, net of cash  
W Eq87 Wage rate  
WB Eq3 The wage bill  
Y Eq88 Output at current prices  
Y_K Eq1 Real output  
YD_HS Eq23 Haig-Simons measure of disposable income  
YD_K_HS Eq28 Haig-Simons measure of real disposable income  
YD_K_R Eq27 Regular real disposable income  
YD_K_R_E Eq31 Expected regular real disposable income  
YD_R Eq21 Regular disposable income  
YD_R_E Eq33 Expected regular disposable income  
Zi Eqs 48; 50; 73; 77; 78; 79; 80; 83; 84 Status variables  

Model INSOUT - First experiment: an increase in the target inventories to sales ratio

Download: gl10insout1 (Eviews 5 to 8) or gl10insout1_v4 (Eviews 4.1)

Download the macro above to generate the charts in figures 10.1A to 10.1I.

Figure 10.1C  Figure 10.1E

Model INSOUT - Second experiment: an increase in real government expenditures

Download: gl10insout2 (Eviews 5 to 8) or gl10insout2_v4 (Eviews 4.1)

Download the macro above to generate the charts in figures 10.2A to 10.2J.

Figure 10.2A  Figure 10.2J

Model INSOUT - Third experiment: an increase in reserve ratios

Download: gl10insout3 (Eviews 5 to 8) or gl10insout3_v4 (Eviews 4.1)

Download the macro above to generate the charts in figures 10.3A to 10.3E.

Figure 10.3A  Figure 10.3E

Model INSOUT - Fourth experiment: an increase in banks target liquidity ratios

Download: gl10insout4 (Eviews 5 to 8) or gl10insout4_v4 (Eviews 4.1)

Download the macro above to generate the charts in figures 10.4A to 10.4D.

Figure 10.4A  Figure 10.4D

Model INSOUT - Fifth experiment: a decrease in the propensity to consume out of disposable income

Download: gl10insout5 (Eviews 5 to 8) or gl10insout5_v4 (Eviews 4.1)

Download the macro above to generate the charts in figures 10.5A to 10.5B.

Figure 10.5A  Figure 10.5B

Model INSOUT - Sixth experiment: an increase in the target real wage rate

Download: gl10insout6 (Eviews 5 to 8) or gl10insout6_v4 (Eviews 4.1)

Download the macro above to generate the charts in figures 10.6A to 10.6D.

Figure 10.6A  Figure 10.6D

Model INSOUTb - Seventh experiment: an increase in the target real wage rate when interest rates follow price inflation

Download: gl10insout7 (Eviews 5 to 8) or gl10insout7_v4 (Eviews 4.1)

Download the macro above to generate model INSOUTb and the charts in figures 10.7A to 10.7C.

Inflation rate in model INSOUTb  Figure 10.7C