IHS—Miess, Schmelzer/SFC Model Austria—41 3.2.2 Portfolio Choice As mentioned before, the portfolio choice is a crucial element of the model, and work in progress at a very early stage. Most importantly, prices are still exogenous, which would be the main variables regulating the portfolio choice of agents, and also determine the amount of price revaluations (capital gains) in the economy. As of now, agents choose their intended level of financial assets ASSt,s,fa and liabilities LIABt,s,fa subject to portfolio choice parameters taken from the data, which are still exogenous and not connected to prices. They have both a choice of their asset portfolio composition (param- eter ?, taken before the choice of liabilites), as well as their way of financing, i.e. their liabilities (parameter ?). Both porfolio choice parameters are specific for each asset class, sector and time period. The balance sheet extension ?BS also has to be allocated between different asset classes fa, as well as the surplus/deficit from the NFTR model block, i.e. NLNB. Furthermore - as the sum of financial assets and liabilities always has to equal zero - and since the choice of assets and liabilities including the amount of balance sheet extension do not automatically match each other, the RoW is assumed to provide the additional/reduce the exceeding liabilities to satisfy accounting consistency (to be discussed). ASSt,s,fa = ?t,s,fa · ??? fa ASSt?1,s,fa + ?BS +NLNBt,s ?? (18) LIABt,s,fa = ?t,s,fa · ??? fa LIABt?1,s,fa + ?BS ?? (19) The parameters ? and ? have been set to their 2014 values for simplicity, see figures 20 to 23 below for the portfolio share parameters of selected agents. Figure 20: Portfolio Choice of Banks (shares of 100 %) 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 alpha F5F7 - bank - dum F522 - bank - dum F4F8 - bank - dum F3 - bank - dum F2 - bank - dum FA S dir/finp time Sum of value par Legend - F6: Insur. techn. res., F5F7: Stocks, F522: IFU shares, F4F8: Loans, F3: Securities, F2: Deposits, F1: Mon. Gold and SDRs