The Distributive Monetary Analysis of a (un)Sustainable Economy

Figures & data

Figure 1. Evolution of macroeconomic, financial, and ecological variables of the baseline scenario.

Note: The initial values of the variables and parameters used in the simulation analysis are reported in Appendices A–C and Table A3.

Figure 2. Sensitivity test of the baseline scenario related to the evolution of macroeconomic, financial, and ecological variables.

Note: The initial values of the variables and parameters used in the simulation analysis are reported in Appendices A–C and Table A3.

Figure 3. Evolution of macroeconomic, financial, and ecological variables. 0BD (bold lines) versus baseline (dotted lines) scenarios.

Note: The initial values of the variables and parameters used in the simulation analysis are reported in Appendices A–C and Table A3.

Figure 4. Evolution of macroeconomic, financial, and ecological variables. Proactive (bold lines) versus baseline (dotted lines) scenarios.

Note: The initial values of the variables and parameters used in the simulation analysis are reported in Appendices A–C and Table A3.

Table A1. Balance sheet matrix.

	Households		Production firms	Government	Central bank	Banks	∑
	Workers	Capitalists
Inventories			$+IN$				$+IN$
Fixed capital			$+K^I$	$+K^G$			$+K^T$
HPM (cash)	$+H_w$	$+H_{\pi }$			$-H$	$+H_b$	0
Money (deposit)	$+M_w$	$+M_{\pi }$				$-M$	0
Bills		$+B_{\pi }$		$-B$	$+B_{cb}$	$+B_b$	0
Bonds		$+B{L}_{\pi }\cdot p_{bL}$		$-B{L}_{\pi }\cdot p_{bL}$			0
Loans	$-L_w$	$-L_{\pi }$	$-L_f$			$+L$	0
Bank capital		$+O{F}_b$				$-O{F}_b$	0
Balance (net worth)	$-V_w$	$-V_{\pi }$	$-V_f$	$-V_g$	0	0	$-\left(IN+K\right)$
∑	0	0	0	0	0	0	0

Table A2. Transaction-flow matrix.

	Households		Firms		Government		Central bank		Banks		∑
	Workers (1)	Capitalists (2)	Current (3)	Capital (4)		Current (5)	Capital (6)	Current (7)	Capital (8)	Current (9)
Consumption	$-C_w^D$	$-C_{\pi }^D$	$+C^D$								0
Government expenditure					$-G^D$						0
Government Expenditure			$+G^D$								0
Fixed investment			$+I^D$	$-I^D$							0
Inventory accumulation											0
Taxes	$-T_w$	$-T_{\pi }$			+T						0
Wages	+WB		−WB								0
Inventory financing cost			$-r_{l-1}\cdot I{N}_{-1}$						$+r_{l-1}\cdot I{N}_{-1}$		0
Entrepreneurial profits		$+F{D}_f$	$-F_f$	$+F{U}_f$					$+r_{l-1}\cdot \left(L_{f-1}-I{N}_{-1}\right)$		0
Bank profits		$+F_b$							$-F_b$		0
Central bank profits					$+F_{cb}$		$-F_{cb}$				0
Loan interest	$-r_{l-1}\cdot L_{w-1}$	$-r_{l-1}\cdot L_{\pi -1}$							$+r_{l-1}\cdot L_{h-1}$		0
Deposit interest	$+r_{m-1}\cdot M_{w-1}$	$+r_{m-1}\cdot M_{\pi -1}$							$-r_{m-1}\cdot M_{-1}$		0
Bill interest		$+r_{b-1}\cdot B_{\pi -1}$			$-r_{b-1}\cdot B_{-1}$		$+r_{b-1}\cdot B_{cb-1}$		$+r_{b-1}\cdot B_{b-1}$		0
Bond interest		$+B{L}_{-1}$			$-B{L}_{-1}$						0
Flows of funds (changes in stocks)
Change in loans	$+\mathrm{\Delta }{L}_w$	$+\mathrm{\Delta }{L}_{\pi }$		$+\mathrm{\Delta }{L}_f$						$-\mathrm{\Delta }L$	0
Change in HPM (cash)	$-\mathrm{\Delta }{H}_w$	$-\mathrm{\Delta }{H}_{\pi }$						$+\mathrm{\Delta }H$		$-\mathrm{\Delta }{H}_b$	0
Change in money (deposits)	$-\mathrm{\Delta }{M}_w$	$-\mathrm{\Delta }{M}_{\pi }$								$+\mathrm{\Delta }M$	0
Change in bills		$-\mathrm{\Delta }{B}_{\pi }$			$+\mathrm{\Delta }B$			$-\mathrm{\Delta }{B}_{cb}$		$-\mathrm{\Delta }{M}_b$	0
Change in bonds		$-\mathrm{\Delta }BL\cdot p_{bL}$			$+\mathrm{\Delta }BL\cdot p_{bL}$						0
∑	0	0	0	0	0	0	0	0	0	0	0

Table A3. Values of the key parameters in the baseline scenario, in the sensitivity test, in scenario I and in scenario II.

Values of key parameters in the sensitivity and policy analysis
Parameter		Baseline scenario	Sensitivity test I	Sensitivity test II	OBD Ggvernment (scenario I)	Proactive government (scenario II)	Notes
Adjustment workers mpcW parameter	${\gamma }_{c\pi 1}$	0.800	0.600	1.000	0.800	0.80	In Sensitivity test I (Sensitivity test II) weaker (stronger) reaction parameters respect to the Baseline scenario are considered. In the 0 Budget Deficit policy (0BD, scenario I), the Government try to achieve a 0 Budget Deficit demanding an amount of Government expenditure such that the Budget Deficit of the previous period could have been nil. In the Proactive policy (scenario II) the government implements a fiscal policy such that capitalists and workers’ tax rates decrease (increase) when their personal incomes fall behind (exceed) a certain degrowth (growth) threshold with the aim of stimulate (calm) their consumption and in this way the economic activity. With the same intention, Government expenditure increase (decrease) when the aggregate demand fall behind (exceed) a certain degrowth (growth) threshold.
Adjustment capitalists mpcW parameter	${\gamma }_{cw2}$	1.500	1.200	1.800	1.500	1.50
Coefficient of w reaction to change in z	${\gamma }_z$	0.200	0.100	0.300	0.200	0.20
Coefficient of (+)w reaction to change in (−)u	${\gamma }_{u-}$	0.500	0.200	0.800	0.500	0.50
Coefficient of (−)w reaction to change in (+)u	${\gamma }_{u+}$	0.250	0.100	0.400	0.250	0.25
Coefficient of A reaction to change in w	${\gamma }_w$	0.500	0.080	0.700	0.500	0.50
Coefficient of A reaction to change in (K/N)	${\gamma }_{L+}$	0.300	0.275	0.325	0.300	0.30
Labour force reaction to change in (+)Yd	${\gamma }_{L-}$	0.250	0.200	0.300	0.250	0.25
Labour force reaction to change in (−)Yd	$a_1$	0.250	0.200	0.300	0.250	0.25
Expected investment parameter	$a_2$	0.100	0.080	0.120	0.100	0.10
cu parameter related to investment	$a_3$	0.012	0.010	0.014	0.012	0.012
Weight to previous level of profits	$a_4$	0.100	0.040	0.160	0.100	0.10
Weight to previous change in profits	${\psi }_L$	1.000	0.200	1.800	1.000	1.00
Capacity output growth wrt L		2.000	1.000	3.000	2.000	2.00
Capacity output growth wrt A	${\psi }_A$ ${\zeta }_m$	2.000	1.000	3.000	2.000	2.00
Change in deposit rate reaction parameter		0.00020	0.00020	0.00025	0.00020	0.0002
Adjustment workers tax parameter	${\gamma }_{\tau w}$ ${\gamma }_{\tau \pi }$	0	0	0	0	0.5
Adjustment capitalists tax parameter		0	0	0	0	0.3
Threshold of (+)w to let w tax increase	${\phi }_{\tau wh\left(high\right)}$ ${\phi }_{\tau \pi h\left(high\right)}$	0.0%	0.0%	0.0%	0.0%	0.5%
Threshold of (+)π to let π tax increase	${\phi }_{\tau whl\left(low\right)}$	0.0%	0.0%	0.0%	0.0%	0.5%
Threshold of (−)w to let w tax decrease	${\phi }_{\tau \pi l\left(low\right)}$	0.0%	0.0%	0.0%	0.0%	−6.0%
Threshold of (−)π to let π tax decrease	${\gamma }_{g(-)}$	0.0%	0.0%	0.0%	0.0%	−7.0%
Variation of (−)government intervention	${\gamma }_{g(+)}$	0	0	0	0	0
Variation of (+)government intervention	${\phi }_{Gl\left(low\right)}$	0	0	0	0	0.75
Threshold of (−)Yd to let government +G	${\phi }_{Gh\left(high\right)}$	0.0%	0.0%	0.0%	0.0%	0.0%
Threshold of (+)Yd to let government −G		0.0%	0.0%	0.0%	0.0%	5.0%

Table

Symbol	Description	Value	Remarks/sources
$A$	Labour productivity	65	Calibrated such that the model generates the baseline scenario described in Section Four
$B_{bd}$	Bills demanded by banks (balance-sheet constraint of banks)	2,500	Calculated from Equation (121) using the initial values of $M_s$, $L_{fs}$, $L_{hs}$, $H_{bd}$ and $O{F}_b$
$B_{bs}$	Household bills supplied on demand	2,500	Calculated from Equation (120) using the initial values of $B_s$, $B_{hs}$ and $B_{cbs}$
$B_{cbd}$	Demand of central bank bills	2,500	Calculated from Equation (111) using the initial values of $H_s$
$B_{cbs}$	Supply of central bank bills	2,500	Calculated from Equation (112) using the initial values of $B_{cbd}$
$B_s$	Government bills	6,250	Calibrated such that the model generates the baseline scenario described in Section Four
$B_{\pi d}$	Bills demanded by capitalists	1,250	Selected from a reasonable range of values in relation to $V_{fma\pi }$ and respecting the condition of Equation (78)
$B_{\pi s}$	Bills supplied to capitalists on demand	1,250	Calculated from Equation (107) using the initial values of $B_{\pi d}$
$BLR$	Bank liquidity ratio	0.50	Calculated from Equation (122) using the initial values of $B_{bd}$ and $M_s$
$B{L}_{\pi d}$	Long-term bonds demanded by capitalists	1,000	Selected from a reasonable range of values in relation to $V_{fma\pi }$ and respecting the condition of Equation (78)
$B{L}_{\pi s}$	Bond supplied to capitalists	50	Calculated from Equation (106) using the initial values of $B{L}_{\pi d}$
$C^D$	Total demand for consumption goods	600	Calculated from Equation (63) using the initial values of $C_w^D$ and $C_{\pi }^D$
$C_w^D$	Demand for consumption goods by workers	450	Calculated from Equation (59) using the initial values of $c_{w1}$, $Y{D}_w$, $N{L}_w$, $c_{w2}$ and $V_w$
$C_{\pi }^D$	demand for consumption goods by capitalists	150	Calculated from Equation (60) using the initial values of $c_{\pi 1}$, $Y{D}_{\pi }$, $N{L}_{\pi }$, $c_{\pi 2}$ and $V_{\pi }$
$C^P$	Consumption goods produced	600	Calculated from Equation (3) using the initial values of $E_{-1}\left(C^D\right)$ and $s^{\ast }$
$cu$	Capacity utilization	0.83	Calculated from Equation (21) using the initial values of $Y^D$and $Y^{\ast }$
$E_{-1}\left(C^D\right)$	Expected sales	600	Calculated from Equation (4) using the initial values of $C^D$ and ${\eta }_t^{\mathrm{\prime }}$
$E{F}_w$	Ecological footprint generated by workers	2,264	Calculated from Equation (64) using the initial values of ${\phi }_w$ and $C_w^D$
$E{F}_{\pi }$	Ecological footprint generated by capitalists	1,863	Calculated from Equation (65) using the initial values of ${\phi }_{\pi }$ and $C_{\pi }^D$
$F_b$	‘Payment from commercial banks’	450	Calculated from Equation (128) using the initial values of $r_L$, $L_{fs}$, $L_{hs}$, $r_b$, $B_{bd}$, $r_m$ and $M_s$
$F_{cb}$	Realized central bank profits	100	Calculated from Equation (105) using the initial values of $r_b$ and $B_{cbd}$
$F_f$	Realized entrepreneurial profits	300	Calculated from Equation (45) using the initial values of $Y^D$, $WB$, $IN$ and $r_l$
$F{D}_f$	Distributed entrepreneurial profits	100	Calculated from Equation (46) using the initial values of $F_f$ and ${\psi }_D$
$F{U}_f$	Undistributed entrepreneurial profits	200	Calculated from Equation (48) using the initial values of $F_f$, $F{D}_f$, $r_l$, $L_{fd}$ and $IN$
$G^C$	Completion of public investments	200	Calculated from Equation (95) using the initial values of $G^D$and $\theta$
$G^D$	Demand for public investments	200	Calculated from Equation (93A/93B) using the initial values of ${\gamma }_g$, $Y^D$ and $PSBR$ in Scenario I/II
$G^P$	Production of public investments	200	Calculated from Equation (94) using the initial values of $G^D$and $\theta$
$GD$	Government debt	3,800	Calculated from Equation (104) using the initial values of $B_{\pi s},B{L}_{\pi s}$ and $H_s$
$G{L}_T$	Total gross amount of new personal loans	210	Calculated from Equation (67) using the initial values of $G{L}_{\pi }$and $G{L}_w$
$G{L}_w$	Gross amount of new personal loans taken by workers	105	Calculated from Equation (69) using the initial values of $\text{β}$ and $Y{P}_w$
$G{L}_{\pi }$	Gross amount of new personal loans taken by capitalists	105	Calculated from Equation (68) using the initial values of $\text{β}$ and $Y{P}_{\pi }$
$H_{bd}$	Reserve requirements of banks	1,450	Calculated from Equation (119) using the initial values of ${\rho }_b$ and $M_s$
$H_{bs}$	Reserves supplied on demand	1,450	Calculated from Equation (109) using the initial values of $H_{bd}$
$H_{hs}$	Total households’ cash supplied on demand	1,050	Calculated from Equation (108) using the initial values of $H_{\pi d}$ and $H_{wd}$
$H_s$	Total supply of high-powered money	2,500	Calculated from Equation (110) using the initial values of $H_{bs}$ and $H_{hs}$
$H_{wd}$	Workers’ demand for cash	800	Calculated from Equation (85) using the initial values of ${\lambda }_{cw}$ and $C_w^D$
$H_{\pi d}$	Capitalists’ demand for cash	250	Calculated from Equation (84) using the initial values of ${\lambda }_{c\pi }$ and $C_{\pi }^D$
$I^C$	Private investments concluded	200	Calculated from Equation (24) using the initial values of $I^D$
$I^D$	Demand for private investments	200	Selected from a reasonable range of values with respect to $Y^D$ and considering Bibi (2020) and Bibi (2021)
$I^P$	Private investments produced	200	Calculated from Equation (23) using the initial values of $I^D$and $\theta$
$IN$	Inventories valued at current cost	500	Calculated from Equation (11) using the initial values of $UC$ and $Q$
$K^G$	Public capital	10,000	Calibrated such that the model generates the baseline scenario described in Section Four
$K^I$	Private capital	1,000	Calibrated such that the model generates the baseline scenario described in Section Four
$K^T$	Total capital	11,000	Calculated from Equation (97) using the initial values of $K^I$ and $K^G$
$L_{fd}$	Demand for loans by firms	500	Calibrated such that the model generates the baseline scenario described in Section Four
$L_{fs}$	Supply of loans to firms	500	Calculated from Equation (117) using the initial values of $L_{fd}$
$L_{hd}$	Total demand for personal loans	4,000	Calculated from Equation (75) using the initial values of $L_{h\pi d}$ and $L_{hwd}$
$L_{hs}$	Total supply of personal loans	4,000	Calculated from Equation (118) using the initial values of $L_{hd}$
$L_{hwd}$	Demand for personal loans by workers	1,500	Calibrated such that the model generates the baseline scenario described in Section Four
$L_{h\pi d}$	Demand for personal loans by capitalists	2,500	Calibrated such that the model generates the baseline scenario described in Section Four
$LF$	Labour force	16.5	Selected from a reasonable range of values with respect to $N^T$
$M_s$	Money bank deposits	5,000	Calculated from Equation (116) using the initial values of $M_s$
$M_{wd}$	Money deposits demanded by workers	2,500	Calculated from Equation (79) using the initial values of $V_{fmaw}$
$M_{wh}$	Money deposits held by workers	2,500	Calculated from Equation (81) using the initial values of $V_{fmaw}$
$M_{\pi d}$	Money deposits demanded by capitalists	2,500	Selected from a reasonable range of values in relation to $V_{fma\pi }$ and respecting the condition of Equation (78)
$M_{\pi h}$	Money deposits held by capitalists	2,500	Calculated from Equation (80) using the initial values of $V_{fma\pi },B_{\pi d},p_{bL}$ and$B{L}_{\pi d}$
$N^C$	Employment level related to production of consumption goods	9.23	Calculated from Equation (34) using the initial values of $A$ and $C^P$
$N^I$	Employment level related to production of private investments	3.08	Calculated from Equation (35) using the initial values of $A$ and $I^P$
$N^G$	Employment level related to production of public investments	3.08	Calculated from Equation (36) using the initial values of $A$ and $G^P$
$N^T$	Total employment level	15.38	Calculated from Equation (37) using the initial values of $N^C$, $N^I$ and $N^G$
$N{L}_w$	Net amount of new personal loans taken by workers	0	Calculated from Equation (72) using the initial values of $G{L}_w$ and $RE{P}_w$
$N{L}_{\pi }$	Net amount of new personal loans taken by capitalists	0	Calculated from Equation (71) using the initial values of $G{L}_{\pi }$ and $RE{P}_{\pi }$
$O{F}_b$	Own Funds (retained profits) of commercial banks	3,450	Calibrated such that the model generates the baseline scenario described in Section Four
$p_{bL}$	Price of long-term bonds	20	Calculated from Equation (115) using the initial values of $r_{bL}$
$PSBR$	Government deficit	0	Calculated from Equation (102) using the initial values of $G^D$, $r_b$, $B_{\pi s},$ $B_{bs}$, $B{L}_{\pi s}$ and $T_T$
$Q$	Stock of inventories	769.23	Calculated from Equation (10) using the initial values of $C^P$, $C^D$ and $Q$
$r_{bL}$	Rate of interest on long-term bonds	0.05	Calculated from Equation (114) using the initial values of $r_b$ and $ad{d}_{BL}$
$r_l$	Rate of interest on loan	0.10	Calculated from Equation (127) using the initial values of $r_m$ and $ad{d}_1$
$r_m$	Deposit interest rate	0.02	Selected from a reasonable range of values
$RE{P}_w$	Personal loan repayments by workers	105	Calculated from Equation (74) using the initial values of ${\xi }_w$ and $L_{hwd}$
$RE{P}_{\pi }$	Personal loan repayments by capitalists	105	Calculated from Equation (73) using the initial values of ${\xi }_{\pi }$ and $L_{h\pi d}$
$s^{\ast }$	Desired proportion of inventories	0	Calculated from Equation (9) using the initial values of $\alpha$, $E_{-1}\left(C^D\right)$ and $Q$
$T_T$	Total income taxes	400	Calculated from Equation (86) using the initial values of $T_w$and $T_{\pi }$
$T_w$	Income taxes raised by workers	100	Calculated from Equation (55) using the initial values of ${\tau }_w$ and $Y{P}_w$
$T_{\pi }$	Income taxes raised by capitalists	300	Calculated from Equation (56) using the initial values of ${\tau }_{\pi }$ and $Y{P}_{\pi }$
$TE{F}^C$	Total ecological footprint generated	4,127	Calculated from Equation (66) using the initial values of $E{F}_w$ and $E{F}_{\pi }$
$u$	Unemployment rate	0.07	Calculated from Equation (38) using the initial values of $N^T$and $LF$
$UC$	Actual unit cost	0.65	Calculated from Equation (44) using the initial values of $A$ and $WB$
$V_{fmaw}$	Financial market asset (investible) wealth of workers	4,750	Calculated from Equation (83) using the initial values of $V_w$, $L_{wd}$ and $H_{wd}$
$V_{fma\pi }$	Financial market asset (investible) wealth of capitalists	2,500	Calculated from Equation (82) using the initial values of $V_{\pi }$, $L_{\pi d},H_{\pi d}$ and $OF$
$V_w$	Wealth of workers	1,800	Calibrated such that the model generates the baseline scenario described in Section Four
$V_{\pi }$	Wealth of capitalists	5,950	Calibrated such that the model generates the baseline scenario described in Section Four
$w$	Real wage obtained by worker	42.25	Calculated from Equation (32) using the initial values of $N^T$ and $WB$
$WB$	Wage bill	650	Selected from a reasonable range of values with respect to $Y^P$ and considering Bibi (2020) and Bibi (2021)
$Y^{\ast }$	Potential output	1,200	Selected from a reasonable range of values with respect to $Y^P$
$Y^D$	Aggregate demand	1,000	Calculated from Equation (1) using the initial values of $C^D$, $I^D$ and $G^D$
$Y^P$	Aggregate production	1,000	Calculated from Equation (2) using the initial values of $C^P$, $I^P$ and $G^P$
$Y{D}_w$	Aggregate demand by workers	450	Calculated from Equation (53) using the initial values of $Y{P}_w$, $T_w$, $r_l$ and $L_w$
$Y{D}_{\pi }$	Aggregate demand by capitalists	150	Calculated from Equation (54) using the initial values of $Y{P}_{\pi }$, $T_{\pi }$, $r_l$ and $L_{\pi }$
$Y{P}_w$	Personal workers’ income	700	Calculated from Equation (51) using the initial values of $WB$, $r_m$ and $M_w$
$Y{P}_{\pi }$	Personal capitalists’ income	700	Calculated from Equation (52) using the initial values of $F{D}_f$, $F{D}_b$, $r_m$, $\cdot M_{\pi }$, $r_b$, $B_{\pi d}$ and $B{L}_{\pi d}$
${\pi }^e$	Expected profit share	0.03	Calculated from Equation (13) using the initial values of ${\mathrm{\Pi }}^e$, and $Y^D$
${\mathrm{\Pi }}^e$	Expected profit level	30	Calculated from Equation (14) using the initial values of $a_3$, $a_4$ and $F_f$
$z_1$	Logical functions dependent on whether the bank liquidity ratio is within its bottom (bot) and top (top) range	1	Since the initial situation is stationary there is no activation of this parameter at the beginning
$z_2$		1	Since the initial situation is stationary there is no activation of this parameter at the beginning
$\mathrm{\Delta }{r}_m$	Variation of deposit interest rate	0	Since the initial situation is stationary there is no activation of this parameter at the beginning
$\rho$	Profit margin over labour cost	0.54	Calculated from Equation (33) using the initial values of $Y^D$ and $WB$

Table

Symbol	Description	Value	Remarks/sources
$a_1$	Coefficient of investment reaction to expected profit rate	0.10	Selected from a reasonable range of values considering Bibi (2021)
$a_2$	Coefficient of investment reaction to capacity utilization	0.01	Selected from a reasonable range of values considering Bibi (2021)
$a_3$	Coefficient of expected profit to previous realized profit level	0.10	Selected from a reasonable range of values considering Bibi (2021)
$a_4$	Coefficient of expected profit to previous change in realized profits	1	Taken from Bibi (2021)
$ad{d}_1$	Mark-up of loan interest rate on deposit interest rate	0.08	Calibrated such that the model generates the baseline scenario described in Section Four
$ad{d}_{BL}$	Mark-up of long-term bonds additional on bills	0.01	Calibrated such that the model generates the baseline scenario described in Section Four
$bot$	Bottom BLR limit below which $r_m$ increases	0.49	Calibrated such that the model generates the baseline scenario described in Section Four
$c_{w1}$	Marginal propensity of consumption by workers on personal income	0.80	Based on Banca d’Italia (2015)—I bilanci delle famiglie italiane nell’anno 2014
$c_{w2}$	Marginal propensity of consumption by workers on wealth	0.05	Calibrated such that the model generates the baseline scenario described in Section Four
$c_{\pi 1}$	Marginal propensity of consumption by capitalists on personal income	0.60	Based on Banca d’Italia (2015)—I bilanci delle famiglie italiane nell’anno 2014
$c_{\pi 2}$	Marginal propensity of consumption by capitalists on wealth	0.01	Calibrated such that the model generates the baseline scenario described in Section Four
$G^D$	Demand of public investments	200	Selected from a reasonable range of values with respect to $Y^D$ and considering Bibi (2020) and Bibi (2021)
$p_y$	Unit price of output	1	Considered exogenous and constant in the model
$r_b$	Rate of interest on bills	0.04	Selected from a reasonable range of values with respect to $Y^P$
$top$	Upper BLR limit below which $r_m$ decreases	0.52	Calibrated such that the model generates the baseline scenario described in Section Four
$\alpha$	Proportion of inventories/expected sales	1.28	Calibrated such that the model generates the baseline scenario described in Section Four
$\text{β}$	New loans to personal income ratio	0.15	Calculated from Equation (70) using the initial values of ${\text{β}}_0,{\text{β}}_r$ and $r_l$
${\text{β}}_0$	Autonomous coefficient of $\text{β}$	0.025	Calibrated such that the model generates the baseline scenario described in Section Four
${\text{β}}_r$	Coefficient of $\text{β}$ reaction to interest rate	1	Calibrated such that the model generates the baseline scenario described in Section Four
${\gamma }_{c\pi 1}$	Adjustment workers mpcW parameter	0.80	Calibrated such that the model generates the baseline scenario described in Section Four
${\gamma }_{cw2}$	Adjustment capitalists mpcW parameter	1.50	Calibrated such that the model generates the baseline scenario described in Section Four
${\gamma }_g$	Coefficient of G adjustment to change in variation of GDP	0	There is no activation of this parameter in the baseline scenario with a passive government role
${\gamma }_{g(-)}$	Variation of (−) government intervention	0	There is no activation of this parameter in the baseline scenario with a passive government role
${\gamma }_{g(+)}$	Variation of (+) government intervention	0.75	There is no activation of this parameter in the baseline scenario with a passive government role
${\gamma }_k$	Coefficient of A reaction to change in (K/N)	0.30	Based on Bibi (2021)
${\gamma }_L$	Sensitivity of LF reaction to a variation in $Y^D$	0	Calculated from Equation (40–41) using the initial values of $Y^D$
${\gamma }_{L+}$	Sensitivity of (+) LF reaction to (+) variation in $Y^D$	0.25	Calibrated such that the model generates the baseline scenario described in Section Four
${\gamma }_{L-}$	Sensitivity of (−) LF reaction to (−) variation in $Y^D$	0.50	Taken from Bibi (2021)
${\gamma }_u$	Coefficient of W reaction to change in u	0	Calculated from Equation (29–31) using the initial values of $u$
${\gamma }_{u+}$	Coefficient of +W reaction to change in u	0.50	Taken from Font et al. (2015)
${\gamma }_{u-}$	Coefficient of W reaction to change in u	0.25	Selected from a reasonable range of values considering Bibi (2020) and Bibi (2021)
${\gamma }_{\omega }$	Coefficient of A reaction to change in w	0.50	Selected from a reasonable range of values considering Bibi (2020) and Bibi (2021)
${\gamma }_z$	Coefficient of W reaction to change in z	0.20	Taken from Bibi (2020) and Bibi (2021)
${\gamma }_{\tau w}$	Coefficient reaction of workers’ tax rate to personal income variation	0	There is no activation of this parameter in the baseline scenario with a passive government role
${\gamma }_{\tau \pi }$	Coefficient reaction of capitalists’ tax rate to personal income variation	0	There is no activation of this parameter in the baseline scenario with a passive government role
${\delta }_{KI}$	Coefficient of erosion of private capital stock	0.2	Taken from Bibi (2021)
${\delta }_{KG}$	Coefficient of erosion of public capital stock	0.02	Calibrated such that the model generates the baseline scenario described in Section 4
${\zeta }_m$	Coefficient reaction of deposit interest rate	0.0002	Calibrated such that the model generates the baseline scenario described in Section 4
${\eta }^{\mathrm{\prime }}$	Coefficient reaction in expected consumption goods demanded	0	Calculated from Equation (5) using the initial values of $C^D$
${\eta }_L^{\mathrm{\prime }}$	Lower boundary of ${\eta }_t^{\mathrm{\prime }}$	0.5	Selected from a reasonable range of values considering Metzler (1941), Bibi (2020) and Bibi (2021)
${\eta }_U^{\mathrm{\prime }}$	Upper boundary of ${\eta }_t^{\mathrm{\prime }}$	0.5	Selected from a reasonable range of values considering Metzler (1941), Bibi (2020) and Bibi (2021)
${\theta }_I$	Period of construction of private investments	5	Based on Bibi (2021)
${\theta }_G$	Period of construction of public investments	50	Calibrated such that the model generates the baseline scenario described in Section Four
${\lambda }_{cw}$	Proportion of workers’ expenditures paid in cash	1.77	Calibrated such that the model generates the baseline scenario described in Section Four
${\lambda }_{c\pi }$	Proportion of capitalists’ expenditures paid in cash	1.66	Calibrated such that the model generates the baseline scenario described in Section Four
$\lambda {\pi }_{10}$	Autonomous coefficient of capitalists’ demand for money	0.44	Calibrated such that the model generates the baseline scenario described in Section Four
$\lambda {\pi }_{11}$	Coefficient of capitalists’ demand for money related to $r_m$	0.10	Calibrated such that the model generates the baseline scenario described in Section Four
$\lambda {\pi }_{12}$	Coefficient of capitalists’ demand for money related to $r_b$	−0.05	Calibrated such that the model generates the baseline scenario described in Section Four
$\lambda {\pi }_{13}$	Coefficient of capitalists’ demand for money related to $r_{bL}$	−0.05	Calibrated such that the model generates the baseline scenario described in Section Four
$\lambda {\pi }_{14}$	Coefficient of capitalists’ demand for money related to personal income	0.60	Calibrated such that the model generates the baseline scenario described in Section Four
$\lambda {\pi }_{20}$	Autonomous coefficient of capitalists’ demand for money	0.30	Calibrated such that the model generates the baseline scenario described in Section Four
$\lambda {\pi }_{21}$	Coefficient of capitalists’ demand for bills related to $r_m$	−0.05	Calibrated such that the model generates the baseline scenario described in Section Four
$\lambda {\pi }_{22}$	Coefficient of capitalists’ demand for bills related to $r_b$	0.15	Calibrated such that the model generates the baseline scenario described in Section Four
$\lambda {\pi }_{23}$	Coefficient of capitalists’ demand for bills related to $r_{bL}$	0.15	Calibrated such that the model generates the baseline scenario described in Section Four
$\lambda {\pi }_{24}$	Coefficient of capitalists’ demand for bills related to personal income	−0.30	Calibrated such that the model generates the baseline scenario described in Section Four
$\lambda {\pi }_{30}$	Autonomous coefficient of capitalists’ long-term demand for bonds	0.25	Calibrated such that the model generates the baseline scenario described in Section Four
$\lambda {\pi }_{31}$	Coefficient of capitalists’ long-term demand for bonds related to $r_m$	−0.05	Calibrated such that the model generates the baseline scenario described in Section Four
$\lambda {\pi }_{32}$	Coefficient of capitalists’ long-term demand for bonds related to $r_b$	−0.10	Calibrated such that the model generates the baseline scenario described in Section Four
$\lambda {\pi }_{33}$	Coefficient of capitalists’ long-term demand for bonds related to $r_{bL}$	0.15	Calibrated such that the model generates the baseline scenario described in Section Four
$\lambda {\pi }_{34}$	Coefficient of capitalists’ long-term demand for bonds related to personal income	−0.30	Calibrated such that the model generates the baseline scenario described in Section Four
${\xi }_w$	Proportion of personal loans repaid by workers	0.07	Calibrated such that the model generates the baseline scenario described in Section Four
${\xi }_{\pi }$	Proportion of personal loans repaid by capitalists	0.04	Calibrated such that the model generates the baseline scenario described in Section Four
${\rho }_b$	Proportion of banks reserves to their deposit	0.29	Calibrated such that the model generates the baseline scenario described in Section Four
${\tau }_w$	Workers’ tax rate on their personal income	0.14	Selected from a reasonable range of values
${\tau }_{\pi }$	Capitalists’ tax rate on their personal income	0.43	Selected from a reasonable range of values
${\phi }_{Gh}$	Upper limit above which government expenditure decreases	0.0%	There is no activation of this parameter in the baseline scenario with a passive government role
${\phi }_{Gl}$	Lower limit below which government expenditure increases	0.0%	There is no activation of this parameter in the baseline scenario with a passive government role
${\phi }_w$	Weight of workers’ consumption ecological footprint	5.03	Taken from Mackenzie et al. (2008)
${\phi }_{\pi }$	Weight of capitalists’ consumption ecological footprint	12.42	Taken from Mackenzie et al. (2008)
${\phi }_{\tau wh}$	Upper threshold above which workers’ tax rate increases	0.0%	There is no activation of this parameter in the baseline scenario with a passive government role
${\phi }_{\tau \pi h}$	Upper threshold above which capitalists’ tax rate increases	0.0%	There is no activation of this parameter in the baseline scenario with a passive government role
${\phi }_{\tau wl}$	Lower threshold below which the workers’ tax rate decreases	0.0%	There is no activation of this parameter in the baseline scenario with a passive government role
${\phi }_{\tau \pi l}$	Upper threshold below which the capitalists’ tax rate decreases	0.0%	There is no activation of this parameter in the baseline scenario with a passive government role
${\psi }_A$	Coefficient of Y* (capacity output) growth wrt A	2	Calibrated such that the model generates the baseline scenario described in Section Four
${\psi }_D$	Proportion of entrepreneurial profits distributed	0.33	Selected from a reasonable range of values
${\psi }_L$	Coefficient of Y* (capacity output) growth wrt LF	2	Calibrated such that the model generates the baseline scenario described in Section Four

Note: The file with which the simulation exercises have been developed is available on request from the author.

Bibi, S. 2020. ‘Keynes, Kalecki and Metzler in a Dynamic Distribution Model.’ Cambridge Journal of Economics 44 (1): 73–104.

 Google Scholar

Bibi, S. 2021. ‘The Stabilising Role of the Government in a Dynamic Distribution Growth Model.’ Journal of Post-Keynesian Economics 44 (1): 112–142. doi:10.1080/01603477.2020.1835495

 Web of Science ®Google Scholar

Banca d’Italia. 2015. ‘I bilanci delle famiglie italiane nell’anno 2014 in Supplementi al Bollettino Statistico.’ https://www.bancaditalia.it/pubblicazioni/indagine-famiglie/bil-fam2014/suppl_64_15.pdf.

 Google Scholar

Font, P., M. Izquierdo, and S. Puente. 2015. ‘Real Wage Responsiveness to Unemployment in Spain: Asymmetries Along the Business Cycle.’ IZA Journal of European Labor Studies 4 (13). doi:10.1186/s40174-015-0038-x.

 Google Scholar

Metzler, L. A. 1941. ‘The Nature and Stability of Inventory Cycles.’ The Review of Economic Statistics, 113–129. doi:10.2307/1927555

 Google Scholar

Mackenzie, H., H. Messinger, and R. Smith. 2008. SIZE MATTERS: Canada’s Ecological Footprint, by Income. Toronto, Ontario: Canadian Centre for Policy Alternatives.

 Google Scholar