Visualising stock flow consistent models as directed acyclic graphs

TL;DR

This paper introduces a method to represent stock-flow consistent macroeconomic models as directed acyclic graphs, enhancing clarity, causal analysis, and model specification, supported by a new software implementation.

Contribution

It provides a novel graphical representation for macroeconomic models, facilitating better understanding and analysis compared to traditional methods.

Findings

Models can be effectively visualized as DAGs

Graphical representation improves causal inference

Software package enables easy implementation

Abstract

We show how every stock-flow consistent model of the macroeconomy can be represented as a directed acyclic graph. The advantages of representing the model in this way include graphical clarity, causal inference, and model specification. We provide many examples implemented with a new software package.