The Minskyan System, Part II: Dynamics of the Minskyan Analysis and the Financial Fragility Hypothesis
This is the second part of a three-part analysis of the Minskyan framework. It studies in detail the dynamics at the root of the endogenous financial weakening of capitalist economic systems. This part combines the properties presented in part I with other important concepts, such as the paradox of leverage and conventional expectations, to explain the Financial Instability Hypothesis. It is demonstrated that the signs of fragility are not always visible and that financial weakening can take many different (even though well-defined) routes. This is used to draw some conclusion about the appropriate way to test for this hypothesis and the limit of data.
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- Lavoie, M. & Seccareccia, M., 1999.
"Minsky's Financial Fragility Hypothesis: a Missing Macroeconomic Link?,"
9904e, University of Ottawa, Department of Economics.
- Marc Lavoie & Mario Seccareccia, 2001. "Minsky's financial fragility hypothesis: a missing macroeconomic link?," Chapters, in: Financial Fragility and Investment in the Capitalist Economy, chapter 4 Edward Elgar Publishing.
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- Robert J. Shiller, 1998. "Human Behavior and the Efficiency of the Financial System," Cowles Foundation Discussion Papers 1172, Cowles Foundation for Research in Economics, Yale University.
- Claudia Campbell & Hyman Minsky, 1987. "How to get off the back of a tiger, or, do initial conditions constrain deposit insurance reform?," Proceedings 158, Federal Reserve Bank of Chicago.
- Jack Guttentag & Richard J. Herring, 1988. "Prudential supervision to manage systemic vulnerability," Proceedings 217, Federal Reserve Bank of Chicago.
- L. Randall Wray, "undated". "Surplus Mania: A Reality Check," Economics Policy Note Archive 99-3, Levy Economics Institute.
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