An update on Kalecki–Minsky modelling

Abstract

Within post-Keynesian macroeconomics, the Kaleckian streams analysing demand regimes and the Minskyan streams analysing financial instability have proceeded relatively independently. To develop a comprehensive alternative to mainstream economics, post-Keynesians will have to integrate Kaleckian and Minskyan arguments with an analysis of the supply side. This paper gives a partial update on advances in Kalecki-Minsky modelling. First, theoretically, it discusses the notion of pseudo-Goodwin cycles. Second, it presents empirical findings on endogenous debt cycles. Third, it reviews evidence of the relative size of distributional and financial effects on demand. Fourth, it reports results on the drivers of household debt.

Testing fundamentalist–momentum trader financial cycles: An empirical analysis via the Kalman filter

“…In the second group, asset prices play the key role (see, e.g., Ryoo, 2016; Taylor & O’Connell 1985). In the standard version of the debt cycles, the model consists of a pro‐cyclical debt ratio and a long‐term negative effect of debt on investment which interact to generate cycles (Stockhammer, 2019). This idea is developed using diverse mechanisms and theoretical foundations: we can list the Kalecki–Minsky models, Kaldor–Minsky models, Goodwin–Minsky models, credit rationing models, endogenous target debt ratio models and Minsky–Veblen models.…”