IDEAS home Printed from https://ideas.repec.org/a/ekz/ekonoz/2009319.html
   My bibliography  Save this article

La fallida búsqueda de la estabilidad

Author

Listed:
  • Matthew Greenwood-Nimmo

    (Universidad de Leeds)

Abstract

Minsky’s contention that stability is destabilising has profound implications for the conduct of stabilisation policy. The pursuit of price stability by central banks rests on the assumption that (price-level) stability begets financial stability. However, that hypothesis has been violated in recent years by the increasing incidence and severity of financial bubbles during the most remarkable period of prolonged economic stability in recent memory. Using an uncontroversial two-step estimation procedure, this paper demonstrates that periods of stability variously defined have led to increased corporate leveraging in the US since the 1970s. If one accepts that a firm’s ability to service its debts decreases as the ratio of debts to income increases, ceteris paribus, the results provide strong support for the Minskyan view.

Suggested Citation

  • Matthew Greenwood-Nimmo, 2009. "La fallida búsqueda de la estabilidad," EKONOMIAZ. Revista vasca de Economía, Gobierno Vasco / Eusko Jaurlaritza / Basque Government, vol. 72(03), pages 224-243.
  • Handle: RePEc:ekz:ekonoz:2009319
    as

    Download full text from publisher

    File URL: http://www.ogasun.ejgv.euskadi.net/r51-k86aekon/es/k86aEkonomiazWar/ekonomiaz/downloadPDF?R01HNoPortal=true&idpubl=67®istro=1014
    File Function: complete text
    Download Restriction: no

    References listed on IDEAS

    as
    1. Eckhard Hein & Till van Treeck, 2010. "‘Financialisation’ in Post-Keynesian Models of Distribution and Growth: A Systematic Review," Chapters,in: Handbook of Alternative Theories of Economic Growth, chapter 13 Edward Elgar Publishing.
    2. Ozgür Orhangazi, 2008. "Financialisation and capital accumulation in the non-financial corporate sector:," Cambridge Journal of Economics, Oxford University Press, vol. 32(6), pages 863-886, November.
    3. Peter Skott & Soon Ryoo, 2008. "Macroeconomic implications of financialisation," Cambridge Journal of Economics, Oxford University Press, vol. 32(6), pages 827-862, November.
    4. James R. Crotty, 1990. "Owner–Manager Conflict and Financial Theories of Investment Instability: A Critical Assessment of Keynes, Tobin, and Minsky," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 12(4), pages 519-542, July.
    5. Eckhard Hein, 2010. "Shareholder Value Orientation, Distribution And Growth-Short- And Medium-Run Effects In A Kaleckian Model," Metroeconomica, Wiley Blackwell, pages 302-332.
    6. Thomas I. Palley, 1994. "Debt, Aggregate Demand, and The Business Cycle: an Analysis in the Spirit of Kaldor and Minsky," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 16(3), pages 371-390, March.
    7. Till van Treeck, 2008. "Reconsidering The Investment-Profit Nexus In Finance-Led Economies: An Ardl-Based Approach," Metroeconomica, Wiley Blackwell, vol. 59(3), pages 371-404, July.
    8. Bhaduri, Amit & Marglin, Stephen, 1990. "Unemployment and the Real Wage: The Economic Basis for Contesting Political Ideologies," Cambridge Journal of Economics, Oxford University Press, vol. 14(4), pages 375-393, December.
    9. Engelbert Stockhammer, 2004. "Financialisation and the slowdown of accumulation," Cambridge Journal of Economics, Oxford University Press, vol. 28(5), pages 719-741, September.
    10. Amit Bhaduri & Kazimierz Laski & Martin Riese, 2006. "A Model Of Interaction Between The Virtual And The Real Economy," Metroeconomica, Wiley Blackwell, vol. 57(3), pages 412-427, July.
    11. Marc Lavoie, 1995. "Interest Rates In Post-Keynesian Models Of Growth And Distribution," Metroeconomica, Wiley Blackwell, vol. 46(2), pages 146-177, June.
    12. Amitava Krishna Dutt, 2006. "Maturity, Stagnation And Consumer Debt: A Steindlian Approach," Metroeconomica, Wiley Blackwell, vol. 57(3), pages 339-364, July.
    13. Craig Medlen, 2003. "The trouble with Q," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 25(4), pages 693-698.
    14. Petra Dünhaupt & Eckhard Hein & Till van Treeck, 2007. "Finanzsystem und wirtschaftliche Entwicklung: Tendenzen in den USA und in Deutschland aus makroökonomischer Perspektive," IMK Studies 05-2007, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Financial Instability Hypothesis; condicional volatility; stabilitation policy.;

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ekz:ekonoz:2009319. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Iñaki Treviño). General contact details of provider: http://edirc.repec.org/data/debages.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.