Munich Personal RePEc Archive

A Minskian extension to Kaleckian dynamics

Kemp-Benedict, Eric (2015): A Minskian extension to Kaleckian dynamics.

[img]
Preview
PDF
MPRA_paper_65186.pdf

Download (116kB) | Preview

Abstract

Minsky’s financial instability hypothesis (FIH) has been criticized as suffering from a fallacy of composition that violates a central thesis of Kalecki. Nevertheless, Minsky’s description of borrowing and lending behavior is sufficiently compelling that it continues to drive new research. In this paper we propose a modified Kaleckian model in which a behavioral rule captures Minsky’s microeconomic argument that firms and banks increase the leverage of new loans during booms, but which translates through Kaleckian dynamics into a falling debt-to-capital ratio at a macroeconomic level. The expanding loan-to-capital ratio drives a potential instability, but in utilization, rather than debt.

UB_LMU-Logo
MPRA is a RePEc service hosted by
the Munich University Library in Germany.