A “Minsky crisis” in a Stock-Flow Consistent model
This study uses the Stock-Flow Consistent modelling approach to assess the relevance of Minsky’s demonstration of his financial instability hypothesis. We show that this demonstration, based on the assumption of a pro-cyclical leverage ratio, is incompatible with the Kaleckian analysis of profits en...
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| Format: | Article |
| Language: | English |
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Association Recherche & Régulation
2014-12-01
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| Series: | Revue de la Régulation |
| Subjects: | |
| Online Access: | https://journals.openedition.org/regulation/10963 |
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| Summary: | This study uses the Stock-Flow Consistent modelling approach to assess the relevance of Minsky’s demonstration of his financial instability hypothesis. We show that this demonstration, based on the assumption of a pro-cyclical leverage ratio, is incompatible with the Kaleckian analysis of profits endorsed by Minsky. Therefore we suggest replacing the assumption of a pro-cyclical leverage ratio with one of a pro-cyclical short-term borrowing, which also appears in Minsky’s work. |
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| ISSN: | 1957-7796 |