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Financial System Fragility Models

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  • Iancu, Aurel

    (Romanian Academy, National Institute of Economic Research)

Abstract

This paper analyses two types of models: 1. Those based on assumptions of monetary and financial market equilibrium disturbance in line with mainstream thinking that there is self-regulating market, the units would have rational expectations, and the crisis would be a temporary phenomenon caused by exogenous shocks. Here are the main objectives and features characteristic of the three generations of models; 2. Models based on financial instability hypothesis, taking into account both the dynamics of financial market as well as the role of uncertainty, interdependency and dynamic complexity. We present here Minsky’s concept of financial instability and then analyse the content of some simplified models.

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Bibliographic Info

Paper provided by National Institute of Economic Research in its series Working Papers of National Institute of Economic Research with number 110211.

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Length: 29 pages
Date of creation: Feb 2011
Date of revision:
Handle: RePEc:ror:wpince:110211

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Related research

Keywords: instability; model generations; balance sheet; hedge units; speculative units; Ponzi units; cyclical fluctuations; complexity;

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  1. Steven Radelet & Jeffrey Sachs, 1998. "The Onset of the East Asian Financial Crisis," NBER Working Papers 6680, National Bureau of Economic Research, Inc.
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Cited by:
  1. Dan OLTEANU, 2011. "A Survey On The Drivers And Mechanisms Of Financial Crises," Romanian Journal of Economics, Institute of National Economy, vol. 33(2(bis)(42), pages 73-100, December.

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