Dynamics of a Post-Keynesian Stock-Flow Consistent Model With Financing of Current Production Expenses

In Post-Keynesian stock-flow consistent models (SFC), the financing of production expenditures does not appear explicitly. We propose to make it appear by considering different kinds of financing of production expenditures by firms: cash-flow, short-term credits. We study the impact of these financing choices on the dynamics of an SFC model. The results indicate that the profit rates of firms and banks, as well as the growth rate and the debt level of an economy can be affected by the financing choices of firms' production expenditures. However, the way in which production expenditures are financed does not alter fundamentally the dynamics of the model.