IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this paper

An empirical analysis of Minsky regimes in the US economy

Listed author(s):
  • Leila E. Davis - Joao Paulo A. de Souza y Gonzalo Hernandez

    ()

  • Joao Paulo A. de Souza

    ()

  • Gonzalo Hernandez

    ()

In this paper we analyze Minskian dynamics in the US economy via an empirical application of Minsky's nancing regime classi cations to a panel of non nancial corporations. First, we map Minsky's de nitions of hedge, speculative and Ponzi nance onto rm-level data to describe the evolution of Minskian regimes. We highlight striking growth in the share of Ponzi rms in the post-1970 US, concentrated among small corporations. This secular growth in the incidence of Ponzi rms is consistent with the possibility of a long wave of increasingly fragile nance in the US economy. Second, we explore the possibility of short-run Minskian dynamics at a business-cycle frequency. Using linear probability models relating rms' probability of being Ponzi to the aggregate output gap, which captures short-term macroeconomic uctuations exogenous to individual rms, we nd that aggregate downturns are correlated with an almost zero increased probability that rms are Ponzi. This result is corroborated by quantile regressions using a continuous measure of nancial fragility, the interest coverage ratio, which identify almost zero effects of short-term uctuations on nancial fragility across the interest coverage distribution. Together, these results speak to an important question in the theoretical literature on nancial fragility regarding the duration of Minskian cycles, and lend support, in particular, to the contention that Minskian dynamics may take the form of long waves, but do not operate at business cycle frequencies.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://cea.javeriana.edu.co/investigacion-publicaciones/documentos-trabajo/vniversitas-economica
Download Restriction: no

Paper provided by UNIVERSIDAD JAVERIANA - BOGOTÁ in its series VNIVERSITAS ECONÓMICA with number 015495.

as
in new window

Length: 42
Date of creation: 15 Feb 2017
Handle: RePEc:col:000416:015495
Contact details of provider:

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as
in new window


  1. Lance Taylor & Stephen A. O'Connell, 1985. "A Minsky Crisis," The Quarterly Journal of Economics, Oxford University Press, vol. 100(Supplemen), pages 871-885.
  2. Nikolaidi, Maria, 2017. "Three decades of modelling Minsky: what we have learned and the way forward," Greenwich Papers in Political Economy 17509, University of Greenwich, Greenwich Political Economy Research Centre.
  3. Timur Behlul, 2011. "Was it really a Minsky moment?," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 34(1), pages 137-158, October.
  4. Fazzari, Steven & Ferri, Piero & Greenberg, Edward, 2008. "Cash flow, investment, and Keynes-Minsky cycles," Journal of Economic Behavior & Organization, Elsevier, vol. 65(3-4), pages 555-572, March.
  5. Marcin Kacperczyk & Philipp Schnabl, 2010. "When Safe Proved Risky: Commercial Paper during the Financial Crisis of 2007-2009," Journal of Economic Perspectives, American Economic Association, vol. 24(1), pages 29-50, Winter.
  6. L. Randall Wray, 2016. "Why Minsky Matters: An Introduction to the Work of a Maverick Economist," Economics Books, Princeton University Press, edition 1, number 10575.
  7. Germán Gutiérrez & Thomas Philippon, 2016. "Investment-less Growth: An Empirical Investigation," NBER Working Papers 22897, National Bureau of Economic Research, Inc.
  8. L. Randall Wray, 2011. "Minsky's Money Manager Capitalism and the Global Financial Crisis," International Journal of Political Economy, M.E. Sharpe, Inc., vol. 40(2), pages 5-20, July.
  9. L. Randall Wray, 2009. "The rise and fall of money manager capitalism: a Minskian approach," Cambridge Journal of Economics, Oxford University Press, vol. 33(4), pages 807-828, July.
  10. Gary A. Dymski, 2010. "Why the subprime crisis is different: a Minskyian approach," Cambridge Journal of Economics, Oxford University Press, vol. 34(2), pages 239-255, March.
  11. 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, M.E. Sharpe, Inc., vol. 16(3), pages 371-390, April.
  12. Eric Tymoigne, 2014. "Measuring macroprudential risk through financial fragility: a Minskian approach," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 36(4), pages 719-744, July.
  13. Jan Kregel, 2008. "Using Minsky's Cushions of Safety to Analyze the Crisis in the U. S. Subprime Mortgage Market," International Journal of Political Economy, M.E. Sharpe, Inc., vol. 37(1), pages 3-23, April.
  14. Soon Ryoo, 2016. "Household debt and housing bubbles: a Minskian approach to boom-bust cycles," Journal of Evolutionary Economics, Springer, vol. 26(5), pages 971-1006, December.
  15. Ryoo, Soon, 2010. "Long waves and short cycles in a model of endogenous financial fragility," Journal of Economic Behavior & Organization, Elsevier, vol. 74(3), pages 163-186, June.
  16. Charles Whalen, 2008. "Understanding the Credit Crunch as a Minsky Moment," Challenge, M.E. Sharpe, Inc., vol. 51(1), pages 91-109, January.
  17. Mulligan, Robert F., 2013. "A sectoral analysis of the financial instability hypothesis," The Quarterly Review of Economics and Finance, Elsevier, vol. 53(4), pages 450-459.
  18. 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.
  19. Steven M. Fazzari, 1999. "Minsky and the Mainstream: Has Recent Research Rediscovered Financial Keynesianism?," Economics Working Paper Archive wp_278, Levy Economics Institute.
  20. Sudipto Bhattacharya & Charles Goodhart & Dimitrios Tsomocos & Alexandros Vardoulakis, 2011. "Minsky’s Financial Instability Hypothesis and the Leverage Cycle," FMG Special Papers sp202, Financial Markets Group.
  21. Steve Keen, 1995. "Finance and Economic Breakdown: Modeling Minsky's "Financial Instability Hypothesis"," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 17(4), pages 607-635, July.
  22. Soon Ryoo, 2013. "Minsky cycles in Keynesian models of growth and distribution," Review of Keynesian Economics, Edward Elgar Publishing, vol. 1(1), pages 37-60, January.
  23. Thomas I. Palley, 2011. "A Theory of Minsky Super-cycles and Financial Crises ," Contributions to Political Economy, Oxford University Press, vol. 30(1), pages 31-46.
  24. Sergio Firpo & Nicole M. Fortin & Thomas Lemieux, 2009. "Unconditional Quantile Regressions," Econometrica, Econometric Society, vol. 77(3), pages 953-973, May.
  25. Antonio J.A. Meirelles & Gilberto Tadeu Lima, 2006. "Debt, financial fragility, and economic growth: a Post Keynesian macromodel," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 29(1), pages 93-115, October.
  26. Elisabetta De Antoni, 2010. "Minsky, Keynes, and Financial Instability," International Journal of Political Economy, M.E. Sharpe, Inc., vol. 39(2), pages 10-25, July.
  27. Lucas Bernard & Aleksandr V. Gevorkyan & Thomas I. Palley & Willi Semmler, 2014. "Time scales and mechanisms of economic cycles: a review of theories of long waves," Review of Keynesian Economics, Edward Elgar Publishing, vol. 2(1), pages 87-107, January.
  28. Soon Ryoo, 2013. "Bank profitability, leverage and financial instability: a Minsky–Harrod model," Cambridge Journal of Economics, Oxford University Press, vol. 37(5), pages 1127-1160.
  29. Alessandro Vercelli, 2011. "A Perspective on Minsky Moments: Revisiting the Core of the Financial Instability Hypothesis," Review of Political Economy, Taylor & Francis Journals, vol. 23(1), pages 49-67.
  30. Domenico Delli Gatti & Mauro Gallegati, 1990. "Financial Instability, Income Distribution, and the Stock Market," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 12(3), pages 356-374, April.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:col:000416:015495. 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: (Mayerly Galindo Rodriguez)

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.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with 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 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.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.