A “Minsky crisis” in a Stock-Flow Consistent model
Abstracts
This study uses the Stock-Flow Consistent modelling approach to assess the relevance of Minsky’s demonstration of his financial instability hypothesis. We show that this demonstration, based on the assumption of a pro-cyclical leverage ratio, is incompatible with the Kaleckian analysis of profits endorsed by Minsky. Therefore we suggest replacing the assumption of a pro-cyclical leverage ratio with one of a pro-cyclical short-term borrowing, which also appears in Minsky’s work.
Index terms
JEL codes:
B22 - Macroeconomics, B50 - General, E12 - Keynes; Keynesian; Post-Keynesian, E4 - Money and Interested Rates, E5 - Monetary Policy; Central Banking; and the Supply of Money and Credit, G1 - General Financial Markets, G11 - Portfolio Choice; Investment Decisions, G21 - Banks; Other Depository Institutions; MortgagesEditor’s notes
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References
Electronic reference
Tarik Mouakil, “A “Minsky crisis” in a Stock-Flow Consistent model”, Revue de la régulation [Online], 16 | 2e semestre / Autumn 2014, Online since 19 December 2014, connection on 29 March 2024. URL: http://journals.openedition.org/regulation/10963; DOI: https://doi.org/10.4000/regulation.10963
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