A Minsky Crisis

Macrodynamics of debt regimes, financial instability and growth

“…10 Even though we built on Foley's (2003) interesting formalization of the minskyan regimes, and actually drew a lot of inspiration from the whole paper, our version of the corresponding taxonomy turned out a different one. Indeed, Foley claimed that a model -like Taylor & O'Connell (1985) or, we should add, the one developed here -that maintains the closed economy Kaleckian relation between the growth rate and the savings out of profits, sr g = , which is eq. (5) above when it is assumed that productive and financial capitalists share a common saving propensity, does impose a regime of hedge finance in which r g < in case it is assumed 1 < s .…”

Keynesian Theorizing During Hard Times: Stock-Flow Consistent Models as an Unexplored 'Frontier' of Keynesian Macroeconomics

“…While we do agree that a (structuralist) comparison between "model-builders" (like Tobin and Godley) and (mostly) "literary" authors (like Davidson and Minsky) is not neutral, we argue that: (i) Davidson (1972Davidson ( , 1994 proposed several formal aggregate specifications which can be usedtogether with his literary descriptions-to build a coherent Davidsonian macromodel; and (ii) the "formal Minskyan literature" (in particular, the models by O'Connel, 1985 andFranke andSemmler, 1989) can be used-together with Minsky's literary descriptions-to build a coherent Minskyan model. Thirdly, it should be noted also that all authors in question work with (short) "period" models, i.e.…”

“…chapter 11) well-26 Decreases in κ (and, therefore, in the demand for "placements") play a crucial role in the "Minskyan crises" described in Taylor and O'Connel (1985) and Franke and Semmler (1989). Taylor and O'Connel explicitly mention the inclusion of Tobinesque demands as a natural development of their model.…”

“…7 Even though the specific financial architectures assumed by Davidson and the FML papers do not exactly match the one above (see discussion below). Taylor and O'Connel (1985) is widely seen as the seminal FM paper. For a critical survey of this literature, see Dos Santos (2004).…”

“…It is, however, relatively easy to modify the demands above to incorporate also the "liquidity preference" parameter κ (a la Taylor and O'Connel, 1985), so dear to these authors.…”