Minsky Models: A Structured Survey

Abstract

Minsky's ideas have recently gained prominence in the mainstream as well as in the heterodox literature. However, there exists no agreement upon the formal presentation of Minsky's insights. The aim of this paper is to survey the literature and identify differences and similarities in the ways through which Minskyan ideas have been formalised. We distinguish between the models that focus on the dynamics of debt or interest, with no or a secondary role for asset prices, and the models in which asset prices play a key role in the dynamic behaviour of the economy. Within the first category of models we make a classification between (i) the Kalecki-Minsky models, (ii) the Kaldor-Minsky models, (iii) the Goodwin-Minsky models, (iv) the credit rationing Minsky models, (v) the endogenous target debt ratio models and (vi) the Minsky-Veblen models. Within the second category of models, we distinguish between (i) the equity price Minsky models and (ii) the real estate price Minsky models. Key limitations of the models and directions for future research are outlined.

Synchronization of Endogenous Business Cycles

“…Since the work of Granger (1966) this possibility has been disregarded, but Beaudry et al (2020) show that some U.S. time series produce a clear spectral peak between 9 and 10 years, at lower frequencies than the ones commonly associated to business cycles. More papers have looked for chaos in economic time series, 5 3 See, among many others, the contributions and review articles in: Kaldor (1940); Hicks (1950); Goodwin (1951Goodwin ( , 1967; Shleifer (1986); Boldrin and Woodford (1990);Foley (1992); Silverberg and Lehnert (1993); Bullard (1994); Matsuyama (2007);Fazzari et al (2008); De Grauwe (2011); Nikolaidi and Stockhammer (2017). 4 See, for example, Frankel and Rose (1998); Baxter and Kouparitsas (2005); Imbs (2006); Calderon et al (2007); Di Giovanni and Levchenko (2010); Ng (2010); Hsu et al (2011);Kalemli-Ozcan et al (2013); Cravino and Levchenko (2017); Di Giovanni et al (2018).…”

Directed Technological Change in a Post-Keynesian Ecological Macromodel

“…Second, a more realistic model would include a more complex banking system, which allows for credit rationing, overshooting on financial markets and debt cycles. SFC models are well suited for modeling such mechanisms and there exists a rich set of literature of incorporate such dynamics (for example Minsky models (Nikolaidi and Stockhammer 2018)). Third, rising inequality highlights the need to model the economic impacts of changes in income and wealth distribution especially across worker and capitalist classes.…”

Short and medium term financial-real cycles: An empirical assessment

“…A sizeable theoretical literature studies various formalisations of Minsky's financial instability hypothesis, a large part of which is surveyed in Nikolaidi and Stockhammer (2017). Some authors assign a key role to the rate of interest in the cycle mechanism (Foley, 1987;Jarsulic, 1989), and a small number to household debt (Ryoo, 2016;Palley, 1994), but the vast majority focus on corporate debt.…”

“…Theories of financially driven business cycle dynamics have enjoyed a resurgence of interest since the financial crises of 2007-8. The literature takes a variety of theoretical standpoints, including Minskyan theories of financial instability (Minsky, 2008(Minsky, , 2016Nikolaidi and Stockhammer, 2017), and New Keynesian theories of the financial accelerator (Kiyotaki and Moore, 1997;DeGrauwe and Macchiarelli 2015). Despite some disagreement about the exact channels, these theories share a common core.…”