The Minskyan System, Part Ii: Dynamics of the Minskyan Analysis and the Financial Fragility Hypothesis

Levy Economics Institute Working Paper No. 453

31 Pages Posted: 14 Jun 2006

Date Written: June 2006

Abstract

This is the second part of a three-part analysis of the Minskyan framework. It studies in detail the dynamics at the root of the endogenous financial weakening of capitalist economic systems. This part combines the properties presented in part I with other important concepts, such as the paradox of leverage and conventional expectations, to explain the Financial Instability Hypothesis. It is demonstrated that the signs of fragility are not always visible and that financial weakening can take many different (even though well-defined) routes. This is used to draw some conclusion about the appropriate way to test for this hypothesis and the limit of data.

Keywords: Post Keynesian economics, Minsky, financial fragility

JEL Classification: E5

Suggested Citation

Tymoigne, Eric, The Minskyan System, Part Ii: Dynamics of the Minskyan Analysis and the Financial Fragility Hypothesis (June 2006). Levy Economics Institute Working Paper No. 453, Available at SSRN: https://ssrn.com/abstract=908608 or http://dx.doi.org/10.2139/ssrn.908608

Eric Tymoigne (Contact Author)

Lewis & Clark College ( email )

0615 SW Palatine Hill Road
Portland, OR 97204
United States

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