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Financial Structure and Instability in an Open Economy

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  • Kenshiro Ninomiya

    () (Faculty of Economics, Shiga University)

Abstract

The subprime loan mortgage crisis has revived scholarly interest in Minsky fs financial instability hypothesis. The related mathematical models present two types of Minskian financial structures, which we identify as the lenders f risk type (LR) and the hedge, speculative and Ponzi type (HSP) We construct macrodynamic models in a fixed and floating exchange rate sys- tem which considers both the LR and HSP financial structures. We examine the effects of international capital mobility and international lenders f risks and demonstrate the significance of the LR and HSP financial structures in the fixed and floating exchange rate system. We emphasize the significance of stable financial structures in order to stabilize dynamic systems in an open economy.

Suggested Citation

  • Kenshiro Ninomiya, 2017. "Financial Structure and Instability in an Open Economy," Discussion Papers CRR Discussion Paper Series B: Financial 16, Shiga University, Faculty of Economics,Center for Risk Research.
  • Handle: RePEc:shg:dpapeb:16
    as

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    File URL: http://www.biwako.shiga-u.ac.jp/risk/RePEc/shg/dppdf/DPB16Ninomiya20170215.pdf
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    References listed on IDEAS

    as
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    2. Kenshiro Ninomiya, 2015. "Financial Structure, Cycle, and Instability," Discussion Papers CRR Discussion Paper Series B: Financial 15, Shiga University, Faculty of Economics,Center for Risk Research, revised Jan 2017.
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    4. Gilberto Tadeu Lima & Antonio J. A. Meirelles, 2007. "Macrodynamics of debt regimes, financial instability and growth," Cambridge Journal of Economics, Oxford University Press, vol. 31(4), pages 563-580, July.
    5. Hiroaki Sasaki & Shinya Fujita, 2012. "The Importance Of The Retention Ratio In A Kaleckian Model With Debt Accumulation," Metroeconomica, Wiley Blackwell, vol. 63(3), pages 417-428, July.
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    7. Kenshiro Ninomiya, 2016. "Financial structure, financial instability, and inflation targeting," Evolutionary and Institutional Economics Review, Springer, vol. 13(1), pages 23-36, June.
    8. Rose, Hugh, 1969. "Real and Monetary Factors in the Business Cycle," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 1(2), pages 138-152, May.
    9. Kenshiro Ninomiya & Masaaki Tokuda, 2017. "Financial Instability in Japan: Debt, Confidence, and Financial Structure," Research in Political Economy, in: Masao Ishikura & Seongjin Jeong & Minqi Li (ed.),Return of Marxian Macro-Dynamics in East Asia, volume 32, pages 39-61, Emerald Publishing Ltd.
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    More about this item

    Keywords

    Minskian financial structure; financial fragility; financial instability; international capital mobility;

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects

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