This paper will be published in a forthcoming book on the crisis edited by Malliaris, Shaw and Shefrin. In what follows, I derive a corrected formula for the role of the change in debt in aggregate demand, which is that ex-post aggregate demand equals ex-ante income plus the circulation of new debt, where the latter term is the velocity of money times the ex-post creation of new debt.Debtwatch
The PDF is available here: Keen2014ModelingFinancialInstability. The Minsky models used in this paper are here in a ZIP file. The latest version of Minsky can be downloaded from here.
Modeling Financial Instability
Steve Keen
catastrophe theory and the YES album called "close to the edge"
ReplyDelete... just wait for the correction
has wall street been pumped up for 5 years for the purpose of popping it and letting all the goodies out and on to main street ?
wall street is the pinatta !!
i hope there is plenty to go round.
"The fact that this simple model generated outcomes that, in a very stylized way, mirror the empirical
ReplyDeleterecord of the recent economic past, emphasizes the importance of developing an approach to
macroeconomics in which banks and private debt play integral roles."
Its such a shame that this man has to go thru all of this work and effort to "prove" this simple observation for the blind idiots...
I'd like to see him add govt spending to his model though not just "private debt"... dont see that here...
rsp,
I had thought Keen would be the first and best able to describe Forex pricing using his models since he would best be able to capture the full picture and timing of the flows. Maybe he has. I mostly read political econ now, thanks to Mosler and y'all.
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