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Technology Shocks and Predictable Minsky Cycles

Author

Listed:
  • Gregory Phelan
  • Jean-Paul L’Huillier
  • Hunter Wieman

Abstract

This paper offers an economical and internally consistent model to rationalize macrofinancial boom-bust cycles. The authors present a simple model that can clarify the interaction of optimism with capital reallocation and demonstrate how this interaction can generate predictable boom-bust financial cycles. This clarification enhances our understanding of the channels through which credit markets could threaten financial stability (Working Paper no. 23-06).

Suggested Citation

  • Gregory Phelan & Jean-Paul L’Huillier & Hunter Wieman, 2023. "Technology Shocks and Predictable Minsky Cycles," Working Papers 23-06, Office of Financial Research, US Department of the Treasury.
    • Handle: RePEc:ofr:wpaper:23-06
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    File URL: https://www.financialresearch.gov/working-papers/files/OFRwp-23-06-technology-shocks-and-predictable-minsky-cycles.pdf
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    References listed on IDEAS

    as
    1. Matthew Rognlie & Andrei Shleifer & Alp Simsek, 2018. "Investment Hangover and the Great Recession," American Economic Journal: Macroeconomics, American Economic Association, vol. 10(2), pages 113-153, April.
    2. Akıncı, Özge & Chahrour, Ryan, 2018. "Good news is bad news: Leverage cycles and sudden stops," Journal of International Economics, Elsevier, vol. 114(C), pages 362-375.
    3. Huseyin Gulen & Mihai Ion & Candace E Jens & Stefano Rossi, 2024. "Credit Cycles, Expectations, and Corporate Investment," The Review of Financial Studies, Society for Financial Studies, vol. 37(11), pages 3335-3385.
    4. Emine Boz, 2009. "Can Miracles Lead to Crises? The Role of Optimism in Emerging Markets Crises," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 41(6), pages 1189-1215, September.
    5. repec:oup:qjecon:v:136:y:2021:i:1:p:229-291. is not listed on IDEAS
    6. Paul Beaudry & Dana Galizia & Franck Portier, 2017. "Is the Macroeconomy Locally Unstable and Why Should We Care?," NBER Macroeconomics Annual, University of Chicago Press, vol. 31(1), pages 479-530.
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    Cited by:

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    2. Brianti, Marco & Cormun, Vito, 2024. "Expectation-driven boom-bust cycles," Journal of Monetary Economics, Elsevier, vol. 146(C).
    3. Hamano, Masashige & Schnattinger, Philip & Shintani, Mototsugu & Uesugi, Iichiro & Zanetti, Francesco, 2025. "Credit Market Tightness and Zombie Firms: Theory and Evidence," CEPR Discussion Papers 19863, Centre for Economic Policy Research.

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    More about this item

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • 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

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