Relearning Economics
@relearningecon.bsky.social
A system dynamicist specializing it's application for Macroeconomic Forecasting. I am the Chief Research Officer at Modern Macro Technologies
https://www.relearningeconomics.com
https://www.relearningeconomics.com
If you're interested in heterodox macro, financial instability, system dynamics, or alternatives to DSGE, I hope you’ll take a look.
📄 dx.doi.org/10.2139/ssrn...
Feedback, critique, and discussion are very welcome.
🧵8/8
📄 dx.doi.org/10.2139/ssrn...
Feedback, critique, and discussion are very welcome.
🧵8/8
November 24, 2025 at 7:55 PM
If you're interested in heterodox macro, financial instability, system dynamics, or alternatives to DSGE, I hope you’ll take a look.
📄 dx.doi.org/10.2139/ssrn...
Feedback, critique, and discussion are very welcome.
🧵8/8
📄 dx.doi.org/10.2139/ssrn...
Feedback, critique, and discussion are very welcome.
🧵8/8
The framework synthesizes:
• Goodwin cycles
• Kalecki's pricing and distribution
• Minsky's financial-instability hypothesis
• Godley & Lavoie SFC accounting
• Keen's debt dynamics, but in continuous time, compatible with simulation.
🧵7/8
• Goodwin cycles
• Kalecki's pricing and distribution
• Minsky's financial-instability hypothesis
• Godley & Lavoie SFC accounting
• Keen's debt dynamics, but in continuous time, compatible with simulation.
🧵7/8
November 24, 2025 at 7:55 PM
The framework synthesizes:
• Goodwin cycles
• Kalecki's pricing and distribution
• Minsky's financial-instability hypothesis
• Godley & Lavoie SFC accounting
• Keen's debt dynamics, but in continuous time, compatible with simulation.
🧵7/8
• Goodwin cycles
• Kalecki's pricing and distribution
• Minsky's financial-instability hypothesis
• Godley & Lavoie SFC accounting
• Keen's debt dynamics, but in continuous time, compatible with simulation.
🧵7/8
This model shows that macroeconomic instability is not a "shock" it's the normal outcome of capitalist feedback structures.
Stability is not an equilibrium property; it's a fragile, temporary configuration of interacting, real, nominal, and financial dynamics.
🧵6/8
Stability is not an equilibrium property; it's a fragile, temporary configuration of interacting, real, nominal, and financial dynamics.
🧵6/8
November 24, 2025 at 7:55 PM
This model shows that macroeconomic instability is not a "shock" it's the normal outcome of capitalist feedback structures.
Stability is not an equilibrium property; it's a fragile, temporary configuration of interacting, real, nominal, and financial dynamics.
🧵6/8
Stability is not an equilibrium property; it's a fragile, temporary configuration of interacting, real, nominal, and financial dynamics.
🧵6/8
The system generates:
• Endogenous business cycles
• Wage–price–profit dynamics
• Private-debt booms & Minskyan crises
• Fiscal-policy stabilization
• Path-dependent nonlinear adjustment, all without any stochastic shocks.
🧵5/8
• Endogenous business cycles
• Wage–price–profit dynamics
• Private-debt booms & Minskyan crises
• Fiscal-policy stabilization
• Path-dependent nonlinear adjustment, all without any stochastic shocks.
🧵5/8
November 24, 2025 at 7:55 PM
The system generates:
• Endogenous business cycles
• Wage–price–profit dynamics
• Private-debt booms & Minskyan crises
• Fiscal-policy stabilization
• Path-dependent nonlinear adjustment, all without any stochastic shocks.
🧵5/8
• Endogenous business cycles
• Wage–price–profit dynamics
• Private-debt booms & Minskyan crises
• Fiscal-policy stabilization
• Path-dependent nonlinear adjustment, all without any stochastic shocks.
🧵5/8
The reduced form links output, inflation, and the interest rate using observable behavioral relations, not optimization.
It mirrors the NK system structurally, but replaces the microfoundations with:
• Effective demand
• Distributional conflict
• Adaptive expectations
🧵4/8
It mirrors the NK system structurally, but replaces the microfoundations with:
• Effective demand
• Distributional conflict
• Adaptive expectations
🧵4/8
November 24, 2025 at 7:55 PM
The reduced form links output, inflation, and the interest rate using observable behavioral relations, not optimization.
It mirrors the NK system structurally, but replaces the microfoundations with:
• Effective demand
• Distributional conflict
• Adaptive expectations
🧵4/8
It mirrors the NK system structurally, but replaces the microfoundations with:
• Effective demand
• Distributional conflict
• Adaptive expectations
🧵4/8
In this paper, I build a continuous-time, nonlinear, stock–flow-consistent framework that yields its own post-Keynesian 3-equation core:
-Demand–utilization dynamics
-Kalecki–Phillips inflation dynamics
-Adaptive monetary rule
-optional 4th: Minskyan private-debt dynamics
🧵3/8
-Demand–utilization dynamics
-Kalecki–Phillips inflation dynamics
-Adaptive monetary rule
-optional 4th: Minskyan private-debt dynamics
🧵3/8
November 24, 2025 at 7:55 PM
In this paper, I build a continuous-time, nonlinear, stock–flow-consistent framework that yields its own post-Keynesian 3-equation core:
-Demand–utilization dynamics
-Kalecki–Phillips inflation dynamics
-Adaptive monetary rule
-optional 4th: Minskyan private-debt dynamics
🧵3/8
-Demand–utilization dynamics
-Kalecki–Phillips inflation dynamics
-Adaptive monetary rule
-optional 4th: Minskyan private-debt dynamics
🧵3/8
DSGE models boil the entire economy down to 3 equations:
• IS (Euler equation)
• NK Phillips Curve
• Taylor Rule
But these rest on assumptions that simply don't exist.
🧵2/8
• IS (Euler equation)
• NK Phillips Curve
• Taylor Rule
But these rest on assumptions that simply don't exist.
🧵2/8
November 24, 2025 at 7:55 PM
DSGE models boil the entire economy down to 3 equations:
• IS (Euler equation)
• NK Phillips Curve
• Taylor Rule
But these rest on assumptions that simply don't exist.
🧵2/8
• IS (Euler equation)
• NK Phillips Curve
• Taylor Rule
But these rest on assumptions that simply don't exist.
🧵2/8
Relearning Economics | Patreon
Complex Real World Economics using System Dynamics
www.patreon.com
November 22, 2025 at 6:23 AM
Economic cycles are classic examples: delayed feedback produces booms and busts.
It isn't "shocks" hitting an otherwise stable system, it's the system's own feedback architecture generating cycles.
🧵9/10
It isn't "shocks" hitting an otherwise stable system, it's the system's own feedback architecture generating cycles.
🧵9/10
November 22, 2025 at 6:23 AM
Economic cycles are classic examples: delayed feedback produces booms and busts.
It isn't "shocks" hitting an otherwise stable system, it's the system's own feedback architecture generating cycles.
🧵9/10
It isn't "shocks" hitting an otherwise stable system, it's the system's own feedback architecture generating cycles.
🧵9/10
But negative loops don't guarantee stability.
If the corrective action is delayed, because of slow information, slow adjustment, or rigid institutions, the system can overshoot or undershoot its target.
That creates oscillations.
🧵8/10
If the corrective action is delayed, because of slow information, slow adjustment, or rigid institutions, the system can overshoot or undershoot its target.
That creates oscillations.
🧵8/10
November 22, 2025 at 6:23 AM
But negative loops don't guarantee stability.
If the corrective action is delayed, because of slow information, slow adjustment, or rigid institutions, the system can overshoot or undershoot its target.
That creates oscillations.
🧵8/10
If the corrective action is delayed, because of slow information, slow adjustment, or rigid institutions, the system can overshoot or undershoot its target.
That creates oscillations.
🧵8/10
Everyday examples of negative loops:
• Thermostats
• Cruise control
• Human temperature regulation
• And, in theory, the Marshallian supply-and-demand mechanism
(Though in real economies, information lags and expectations make it much messier than the textbook story.)
🧵7/10
• Thermostats
• Cruise control
• Human temperature regulation
• And, in theory, the Marshallian supply-and-demand mechanism
(Though in real economies, information lags and expectations make it much messier than the textbook story.)
🧵7/10
November 22, 2025 at 6:23 AM
Everyday examples of negative loops:
• Thermostats
• Cruise control
• Human temperature regulation
• And, in theory, the Marshallian supply-and-demand mechanism
(Though in real economies, information lags and expectations make it much messier than the textbook story.)
🧵7/10
• Thermostats
• Cruise control
• Human temperature regulation
• And, in theory, the Marshallian supply-and-demand mechanism
(Though in real economies, information lags and expectations make it much messier than the textbook story.)
🧵7/10
Negative (balancing) loops are goal-seeking.
They work to bring the system back toward some target or desired state.
If the system drifts away from that target, the negative loop kicks in to correct it.
🧵6/10
They work to bring the system back toward some target or desired state.
If the system drifts away from that target, the negative loop kicks in to correct it.
🧵6/10
November 22, 2025 at 6:23 AM
Negative (balancing) loops are goal-seeking.
They work to bring the system back toward some target or desired state.
If the system drifts away from that target, the negative loop kicks in to correct it.
🧵6/10
They work to bring the system back toward some target or desired state.
If the system drifts away from that target, the negative loop kicks in to correct it.
🧵6/10
Positive loops drive trends, economic expansions, speculative bubbles, and path dependency.
Left unchecked, they can push a system into unstable or undesirable states, the classic vicious or virtuous circle.
🧵5/10
Left unchecked, they can push a system into unstable or undesirable states, the classic vicious or virtuous circle.
🧵5/10
November 22, 2025 at 6:23 AM
Positive loops drive trends, economic expansions, speculative bubbles, and path dependency.
Left unchecked, they can push a system into unstable or undesirable states, the classic vicious or virtuous circle.
🧵5/10
Left unchecked, they can push a system into unstable or undesirable states, the classic vicious or virtuous circle.
🧵5/10
Positive (reinforcing) loops occur when a stock creates more of itself.
Examples:
• People create more people
• Money makes more money
• Capital equipment can produce more capital
• Knowledge accumulates into more knowledge
🧵4/10
Examples:
• People create more people
• Money makes more money
• Capital equipment can produce more capital
• Knowledge accumulates into more knowledge
🧵4/10
November 22, 2025 at 6:23 AM
Positive (reinforcing) loops occur when a stock creates more of itself.
Examples:
• People create more people
• Money makes more money
• Capital equipment can produce more capital
• Knowledge accumulates into more knowledge
🧵4/10
Examples:
• People create more people
• Money makes more money
• Capital equipment can produce more capital
• Knowledge accumulates into more knowledge
🧵4/10
There are two main types of feedback loops: positive and negative.
🧵3/10
🧵3/10
November 22, 2025 at 6:23 AM
There are two main types of feedback loops: positive and negative.
🧵3/10
🧵3/10
A system's stocks define its current state.
The information that flows back from these stocks (directly or indirectly) controls the system's flows, which then change the stocks again.
That circular causality is what creates loops.
🧵2/10
The information that flows back from these stocks (directly or indirectly) controls the system's flows, which then change the stocks again.
That circular causality is what creates loops.
🧵2/10
November 22, 2025 at 6:23 AM
A system's stocks define its current state.
The information that flows back from these stocks (directly or indirectly) controls the system's flows, which then change the stocks again.
That circular causality is what creates loops.
🧵2/10
The information that flows back from these stocks (directly or indirectly) controls the system's flows, which then change the stocks again.
That circular causality is what creates loops.
🧵2/10
Economists don't misunderstand money because it's mysterious.
They misunderstand it because their models assume it away.
If you want to understand the real economy, follow the balance sheets, not the textbooks.
🧵12/12
www.patreon.com/c/relearning...
They misunderstand it because their models assume it away.
If you want to understand the real economy, follow the balance sheets, not the textbooks.
🧵12/12
www.patreon.com/c/relearning...
Relearning Economics | Patreon
Complex Real World Economics using System Dynamics
www.patreon.com
November 15, 2025 at 8:00 AM
Economists don't misunderstand money because it's mysterious.
They misunderstand it because their models assume it away.
If you want to understand the real economy, follow the balance sheets, not the textbooks.
🧵12/12
www.patreon.com/c/relearning...
They misunderstand it because their models assume it away.
If you want to understand the real economy, follow the balance sheets, not the textbooks.
🧵12/12
www.patreon.com/c/relearning...
Until macro takes money seriously, banks, balance sheets, liquidity, payment systems, instability, it'll keep missing what actually drives modern economies.
📎 Minsky (1986)
🧵11/12
📎 Minsky (1986)
🧵11/12
November 15, 2025 at 8:00 AM
Until macro takes money seriously, banks, balance sheets, liquidity, payment systems, instability, it'll keep missing what actually drives modern economies.
📎 Minsky (1986)
🧵11/12
📎 Minsky (1986)
🧵11/12
The reality is simple:
Money is a set of balance-sheet relationships.
Its creation is institutional.
Its effects are distributional.
And the real constraint is resources, not financial assets.
🧵10/12
Money is a set of balance-sheet relationships.
Its creation is institutional.
Its effects are distributional.
And the real constraint is resources, not financial assets.
🧵10/12
November 15, 2025 at 8:00 AM
The reality is simple:
Money is a set of balance-sheet relationships.
Its creation is institutional.
Its effects are distributional.
And the real constraint is resources, not financial assets.
🧵10/12
Money is a set of balance-sheet relationships.
Its creation is institutional.
Its effects are distributional.
And the real constraint is resources, not financial assets.
🧵10/12