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on Post Keynesian Economics |
| By: | Charles J. Whalen |
| Abstract: | It is now clear that most economists underestimated the widening economic impact of the credit crunch that has shaken U.S. financial markets since at least mid-July. A credit crunch is an economic condition in which loans and investment capital are difficult to obtain. In such a period, banks and other lenders become wary of issuing loans, so the price of borrowing rises, often to the point where deals simply do not get done. Financial economist Hyman P. Minsky (1919–1996) was the foremost expert on such crunches, and his ideas remain relevant to understanding the current situation. This brief by Charles J. Whalen demonstrates that the U.S. credit crunch of 2007 can aptly be described as a “Minsky moment.” It begins by taking a look at aspects of this crunch, then examines the notion of a Minsky moment, along with the main ideas informing Minsky’s perspective on economic instability. At the heart of that viewpoint is what Minsky called the “financial instability hypothesis,” which derives from an interpretation of John Maynard Keynes’s work and underscores the value of an evolutionary and institutionally grounded alternative to conventional economics. The brief then returns to the 2007 credit crunch and identifies some of the key elements relevant to fleshing out a Minsky-oriented account of that event. |
| Date: | 2007–10 |
| URL: | http://d.repec.org/n?u=RePEc:lev:levppb:ppb_92&r=pke |
| By: | Dobrescu, Loretti Isabella; Opris, Dumitru |
| Abstract: | We consider a discrete-delay time, Kaldor non-linear business cycle model in income and capital. Given an investment function, resembling the one discussed by Rodano, we use the linear approximation analysis to state the local stability property and local bifurcations, in the parameter space. Finally, we will give some numerical examples to justify the theoretical results. |
| Keywords: | business cycle; Neimark-Sacker bifurcation; discrete-delay time |
| JEL: | C69 C62 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:5415&r=pke |
| By: | David Laidler (University of Western Ontario) |
| Abstract: | In today's discussions of central banking, maintaining macro-financial stability tends to be treated as ancillary to the pursuit of price level goals. This is in strong contrast to the earlier literature, where financial stability was often the main concern of the theory of central banking. This theme is explore first from the point of view of the monetarist tradition, in which a key feature of financial crises was the onset of an excess demand for money which the central bank in its capacity as lender of last resort had an obligation to relieve; and then from that of a later Wicksellian tradition, where co-ordination failures in the inter-temporal allocation of resources that it was monetary policy's task to avoid, were emphasized. Though there are no long-lost sure cures for financial instability awaiting discovery in the older literature, its emphasis on the potential for markets to fail to clear provides a helpful perspective on the phenomenon, often missing from modern models of the conduct of monetary policy. |
| Keywords: | financial stability; financial instability; crises; co-ordination failure; lender of last resort; inflation; monetarism; forced saving; Wicksell |
| JEL: | B13 B22 E31 E32 E58 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:uwo:epuwoc:20073&r=pke |