Profits, Confidence and public deficits: modeling Minsky's institutional dynamics
The aim of this paper is to present a “Minskian” model which explicitly deals with the influence of the institutional dynamics on the relation between finance, investment and economic fluctuations. First, the Minskian foundations of the proposed analytical framework are highlighted. Second the dynamical properties of the model are studied, drawing the inferences of a stabilization policy. It is shown that the economy is unstable when the budget policy is not very sensitive to variations in private investment. On the contrary, when, the counter cyclical deficit constraint is flexible enough, the economy is stabilized. These results, that echo recent debates and proposals on budget deficits rules in the EMU, are fully consistent with the way Minsky considers that public authorities may “stabilize an unstable economy”.
|Date of creation:||2005|
|Date of revision:|
|Publication status:||Published, Journal of Post Keynesian Economics, 2005, 28, 1, 136-154|
|Note:||View the original document on HAL open archive server: http://halshs.archives-ouvertes.fr/halshs-00465827/en/|
|Contact details of provider:|| Web page: http://hal.archives-ouvertes.fr/|
When requesting a correction, please mention this item's handle: RePEc:hal:journl:halshs-00465827. 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: (CCSD)
If references are entirely missing, you can add them using this form.