Managerial Economics

Lecture Nine:
Alternative theories of
macroeconomic behaviour
Recap
Last week
Empirical data on economic cycle contradicts
neoclassical economics:
Prices anti-cyclical
Wages pro-cyclical
No diminishing marginal productivity
Credit leads cycle, money base follows
Not quantity theory of money but endogenous
credit & money creation
Complements Blinders survey research
Supports Schumpeters theory of cycle
K&P conclude with fascinating statement:
Money, credit and business cycles
The fact that the transaction component of real cash
balances (M 1) moves contemporaneously with the cycle
while the much larger nontransaction component (M2)
leads the cycle suggests that credit arrangements could
play a significant role in future business cycle theory.
Introducing money and credit into growth theory in a
way that accounts for the cyclical behavior of
monetary as well as real aggregates is an important
open problem in economics.
This open problem the focus of Hyman Minskys
research
Like father, like son
Minsky a student of Schumpeters
& influenced by Keynes and Marx
Built on foundations of all three (but never admitted to
inspiration from Marxworked during McCarthyist
period in USA when reading Marx effectively a crime)
Did first degree in mathematics before economics Phd
During longest period of sustained prosperity in
Americas history, developed the Financial Instability
Hypothesis
Key proposition: The most significant economic event of
the era since World War II is something that has not
happened: there has not been a deep and long-lasting
depression. (Minsky 1982: xi)
Why is this significant? Because
Financial Instability Hypothesis
As measured by the record of history, to go more than
thirtyfive years without a severe and protracted
depression is a striking success.
Before World War II, serious depressions occurred
regularly. The Great Depression of the 1930s was just
a "bigger and better" example of the hard times that
occurred so frequently. This postwar success indicates
that something is right about the institutional
structure and the policy interventions that were
largely created by the reforms of the 1930s.. (xi)
So what were these structures & interventions?
Restrained use of debt
Public spending to ameliorate any downturn
Both developed in response to Great Depression:
The Great Depression
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WW II Brings
Sustained Recovery
Minskian Economic History
Minskys reading of Depression:
Final in series of financial crises in which accumulated
debt & falling prices overwhelmed system
Deflation (prices fell by up to 10% p.a.) meant real
rate of interest exceeded 15%
Nominal debt fell but real debt (ratio nominal debt to
nominal DGP) ballooned
Irving Fisher claimed debt/GDP ratio was
60% in 1929
160% by 1933
Complex price dynamics, mechanics of bankruptcy,
government public works, etc. partially reduced debts;
World War II reduced them to trivial levels
USA Interest Rates 1918-2000
-20
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Interbank Rate
Real Rate
Inflation Rate
Linear (Real Rate)
Poly. (Real Rate)
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Minskian Economic History
Post-War success due to
Reduction of private debt to historically low levels
Culture of prudence after WWII, Great Depression
versus excess of Roaring Twenties stock market boom
Big government
Large government spending/taxing role counterbalanced
private sector tendencies to excess during boom,
frugality during slump
Institutions designed to attenuate excessive behaviour
in borrowing, lending, investing
Emphasis upon income equality
Less money for speculation by wealthy
More for income-financed stable mass consumption
Minskian Economic History
Gradual development of problems since WWII due to
gradual
Increase in debt to income levels over many business
cycles
Decline in fear of financial collapse as GD forgotten
Relaxation of prudent financial arrangements
Financial fragility rising from 1950 till early 1960s
Financial crises in USA but still high
growth/employment
1973: major financial crisis in period of high
employment:
Income distribution (high wages) and raw materials (high
prices) driven inflation
Stagflation: first major post WWII financial crisis
Financial Instability Hypothesis
To understand why weve had crises but not a Depression,
we need
an economic theory which makes great depressions
one of the possible states in which our type of
capitalist economy can find itself.
We need a theory which will enable us to identify
which of the many differences between the economy
of 1980 and that of 1930 are responsible for the
success of the postwar era. (xi)
Neoclassical & conventional Keynesian models cant do
this because they are timeless equilibrium models
might explain equilibrium but
Cant explain location of equilibrium itself
Omit time processes that are evolutionary and non-
equilibrium
Financial Instability Hypothesis
Minsky knew suitable model had to
treat financial crises as normal events in
unconstrained capitalist economy
Explain why such events hadnt happened in 1948-1966:
The first twenty years after World War II were
characterized by financial tranquility. No serious threat
of a financial crisis or a debtdeflation process took
place.
The decade since 1966 has been characterized by
financial turmoil. Three threats of financial crisis
occurred, during which Federal Reserve interventions in
money and financial markets were needed to abort the
potential crises. (1982: 63)
Minsky on the historical record 1948-1978
Financial Instability Hypothesis
The first post-World War II threat of a financial crisis
that required Federal Reserve special intervention was
the so-called "credit crunch" of 1966. This episode
centered around a "run" on bank-negotiable certificates
of deposit.
The second occurred in 1970, and the immediate focus of
the difficulties was a "run" on the commercial paper
market following the failure of the PennCentral Railroad.
The third threat of a crisis in the decade occurred in
1974-75 can be best identified as centering around the
speculative activities of the giant banks. In this third
episode the Franklin National Bank of New York, with
assets of $5 billion as of December 1973, failed after a
"run" on its overseas branch. (63)
Financial Instability Hypothesis
The lessons from this history?:
Since this recent financial instability is a recurrence
of phenomena that regularly characterized our
economy before World War II, it is reasonable to
view financial crises as systemic, rather than
accidental, events.
From this perspective, the anomaly is the twenty
years after World War II during which financial
crises were absent, which can be explained by the
extremely robust financial structure that resulted
from a Great War following hard upon a deep
depression.
Since the middle sixties the historic crisis-prone
behavior of an economy with capitalist financial
institutions has reasserted itself (63)
Financial Instability Hypothesis
1864.0 1875.5 1887.0 1898.5 1910.0
Year
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0.3
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Manufacturing Output
Wholesale Prices
Composite Wages
The 19th Century Trade Cycle
Procyclical
prices
Frequent
wage falls
Financial
crises
roughly every
20 years
Minskys view of unbridled capitalism supported by record
of 19
th
century trade cycle:
Financial Instability Hypothesis
But post-1973 still differs from pre-WWII periods of
instability:
The past decade differs from the era before World
War II in that embryonic financial crises have been
aborted by a combination of support operations by the
Federal Reserve and the income, employment, and
financial effects that flow from an immensely larger
government sector. This success has had a side effect,
however; accelerating inflation has followed each
success in aborting a financial crisis. (63)
So how to turn these historical insights into a theory?
Firstly, build on your antecedents

Brief HET of Minsky
Parents met at a Communist Party social function
No prizes for guessing early formative influences!
Fought in US Army in WWII, decamped post-war to do a
degree
Educated during McCarthyist communist witch hunt
periodno mention ever of Marx in his research, for
obvious reasons
PhD supervisor Joseph Schumpeter: the archetypal
theorist of cycles
Foundation influences thus Marx & Schumpeterand not
Keynes
With degree in mathematics, attempted to build
mathematical model of trade cycle (based on Hickss
difference equation model, extended by Kaleckis
principle of increasing risk)
Brief HET of Minsky
Kalecki argued investment restrained by increasing risk
(uncertainty) as capital grows
Minsky used this at macro level in model of trade cycle
Model was
( )
1 2 t t t
Y Y Y o | |

= +
Minsky made | dependent on financial conditions
| declines as economy grows, thus giving turning point
to upward explosive movement:
"the accelerator coefficient ... is in part based on
the productive efficiency of investment, but it is
also related to the willingness of investors to take
risks and the terms in which investors can finance
their endeavours..." (Minsky 1965: 261)
Brief HET of Minsky
Model went nowhere, but Minsky began to explore
implications of finance for economic behaviour
Initially tried from conventional understanding of Keynes:
If we make the Keynesian assumption that
consumption demand is independent of interest rates,
but assume that investment demand, and hence the |
coefficient, depends on interest rates, then a rising
set of interest rates will lower the | coefficient.
(Minsky 1965, 1982: 262)
Also went nowhere
Then, one day, by chance, he read Keyness 1937 papers
My interpretations of Keynes is not the conventional
view which is mainly derived from Hicks' "Mr. Keynes
and the Classics," an article which I believe misses
Keynes' point completely (Minsky 1982: 280)
Theres more than one Keynes
Keynesian economics of IS-LM & AS-AD more due to
Hicks than Keynes;
Different theme in Ch. 12 & Ch. 17:
Rather than investment regulated by rate of interest:
investment motivated by the desire to produce those
assets of which the normal supply-price is less than
the demand price (Keynes 1936: 228)
Demand price determined by prospective yields,
depreciation and liquidity preference.
Supply price determined by costs of production
Two price levels in capitalism:
Normal commodities basically cost plus
Assets expectations under uncertainty
Theres more than one Keynes
Two price level analysis becomes more dominant
subsequent to General Theory:
The scale of production of capital assets depends, of
course, on the relation between their costs of
production and the prices which they are expected to
realise in the market. (Keynes 1937a: 217)
Marginal Efficiency of Investment (MEI or MEC for
Capital) analysis akin to view that uncertainty can be
reduced to the same calculable status as that of
certainty itself via a Benthamite calculus, whereas
uncertainty in investment is that about which there is
no scientific basis on which to form any calculable
probability whatever. We simply do not know. (Keynes
1937a: 213, 214)

Theres more than one Keynes
Three aspects to expectations formation under true
uncertainty
Presumption that the present is a much more
serviceable guide to the future than a candid
examination of past experience would show it to have
been hitherto
Belief that the existing state of opinion as expressed
in prices and the character of existing output is based
on a correct summing up of future prospects
Reliance on mass sentiment: we endeavour to fall back
on the judgment of the rest of the world which is
perhaps better informed. (Keynes 1936: 214)
Fragile basis for expectations formation thus affects
prices of financial assets
What is uncertainty?
Imagine you are very attracted to someone
This person has accepted invitations from 1 in 5 of the
people who have asked him/her out
Does this mean you have a 20% chance of success?
Of course not:
Each experience of attraction is unique
What someone has done in the past with other people
is no guide to what he/she will do with you in the
future
His/her response is not risky; it is uncertain.
Ditto to individual investments
success/failure of past instances give no guide to
present odds
How to cope with relationship uncertainty?
We try to find out beforehand
ask friendseliminate the uncertainty
We do nothing
paralysed into inaction
We ask regardless
compel ourselves into action
We follow conventions
follow the herd of the social conventions of our
society
play the game & hope for the best
So what about investors?
Theres more than one Keynes
In the midst of incalculable uncertainty, investors form
fragile expectations about the future
These are crystallised in the prices they place upon
capital asset
These prices are therefore subject to sudden and violent
change
with equally sudden and violent consequences for the
propensity to invest
The marginal efficiency of capital/investment is simply
ratio of yield from asset to its current demand price, and
therefore there is a different marginal efficiency of
capital for every different level of asset prices (Keynes
1937a: 222)
Theres more than one Keynes
In 1969, Minsky states that his own ideas about
uncertainty "seem to be consistent with those of Keynes"
(1969a, 1982: 191, footnote 6), citing Keynes 1937
Eventually concludes
capitalism is inherently flawed, being prone to
booms, crises and depressions. This instability, in
my view, is due to characteristics the financial
system must possess if it is to be consistent with
full-blown capitalism. Such a financial system will
be capable of both generating signals that induce an
accelerating desire to invest and of financing that
accelerating investment. (Minsky 1969b: 224)
Combines elements of Marx, Keynes & Schumpeter
Christens his model the Financial Instability
Hypothesis:
Financial Instability Hypothesis
The natural starting place for analyzing the relation
between debt and income is to take an economy with a
cyclical past that is now doing well.
The inherited debt reflects the history of the economy,
which includes a period in the not too distant past in
which the economy did not do well.
Acceptable liability structures are based upon some
margin of safety so that expected cash flows, even in
periods when the economy is not doing well, will cover
contractual debt payments.
As the period over which the economy does well
lengthens, two things become evident in board rooms.
Existing debts are easily validated and units that were
heavily in debt prospered; it paid to lever. (65)
Financial Instability Hypothesis
After the event it becomes apparent that the margins
of safety built into debt structures were too great.
As a result, over a period in which the economy does well,
views about acceptable debt structure change. In the
dealmaking that goes on between banks, investment
bankers, and businessmen, the acceptable amount of debt
to use in financing various types of activity and positions
increases.
This increase in the weight of debt financing raises the
market price of capital assets and increases investment.
As this continues the economy is transformed into a boom
economy (65)
This transforms a period of tranquil growth into a period
of speculative excess:
Financial Instability Hypothesis
Stable growth is inconsistent with the manner in which
investment is determined in an economy in which debt-
financed ownership of capital assets exists, and the extent
to which such debt financing can be carried is market
determined.
It follows that the fundamental instability of a
capitalist economy is upward. The tendency to
transform doing well into a speculative investment boom
is the basic instability in a capitalist economy. (65)
This characteristic of capitalism necessarily missed by IS-
LM/AS-AD analysis because process fundamentally non-
equilibrium in nature:
Financial Instability Hypothesis
Whether neoclassical or Keynesian, IS-LM/AS-AD analysis
omits time and debt
Difference between Keynesian (1950-1973) and
Neoclassical (1973+) economic management outcomes
may reflect deterioration of economy
but neither theory could have seen it coming
Minsky notes Hicks also rejects IS-LM
John R. Hicks, "Some Questions of Time in Economics,"
in Evolution, Welfare and Time in Economics: Essays in
Honor of Nicholas GeorgescuRoegen (Lexington, Mass.:
Lexington Books, 1976), pp. 135-151. In this essay Hicks
finally repudiates the potted equilibrium version of
Keynes embodied in the IS-LM curves: he now views IS-
LM as missing the point of Keynes and as bad economics
for an economy in time. (Minsky 1982: 70)
Financial Instability Hypothesis
But both equilibrium theories missed causal factors
behind deterioration:
Evolution of riskier behavior & financial arrangements
as long period of tranquility changed expectations:
Stabilityor tranquilityin a world with a cyclical past
and capitalist financial institutions is destabilizing.
Resulting cyclical/secular increase in debt levels made
economy more fragile, more susceptible to financial
crises
Spelling Minskys model out step by step:
Financial Instability Hypothesis
Economy in historical time
Debt-induced recession in recent past
Firms and banks conservative re debt/equity ratios, asset
valuation
Only conservative projects are funded
Recovery means conservative projects succeed
Firms and banks revise risk premiums
Accepted debt/equity ratio rises
Assets revalued upwards
The Euphoric Economy
Self-fulfilling expectations
Decline in risk aversion causes increase in investment
Investment expansion causes economy to grow faster
Asset prices rise, making speculation on assets
profitable
Increased willingness to lend increases money supply
(endogenous money)
Riskier investments enabled, asset speculation rises
The emergence of Ponzi (Bondy?) financiers
Cash flow from investments always less than debt
servicing costs
Profits made by selling assets on a rising market
Interest-rate insensitive demand for finance
The Assets Boom and Bust
Initial profitability of asset speculation:
reduces debt and interest rate sensitivity
drives up supply of and demand for finance
market interest rates rise
But eventually:
rising interest rates make many once conservative
projects speculative
forces non-Ponzi investors to attempt to sell assets to
service debts
entry of new sellers floods asset markets
rising trend of asset prices falters or reverses
Crisis and Aftermath
Ponzi financiers go bankrupt:
can no longer sell assets for a profit
debt servicing on assets far exceeds cash flows
Asset prices collapse, drastically increasing debt/equity
ratios
Endogenous expansion of money supply reverses
Investment evaporates; economic growth slows or
reverses
Economy enters a debt-induced recession ...
High Inflation?
Debts repaid by rising price level
Economic growth remains low: Stagflation
Renewal of cycle once debt levels reduced
Crisis and Aftermath
Low Inflation?
Debts cannot be repaid
Chain of bankruptcy affects even non-speculative
businesses
Economic activity remains suppressed: a Depression
Big Government?
Anti-cyclical spending and taxation of government
enables debts to be repaid
Renewal of cycle once debt levels reduce
Minskian Economic History
Since WWII
Debt has risen in ratchet-like manner
Rise during boom
Peak & then fall during slump
Cycle renews with higher initial debt level
Government spending rescued system in each slump
Massive inflation in asset prices as by-product
Monetarist/Neoclassical policy has
reduced counter-vailing impact of government spending
driven down inflation rate to near-deflation levels
Debt levels now highest in history, inflation near zero

Minskian Economic History of Australia
Data from
recent (2004)
PhD thesis:
Luke Reedman, "As
assessment of the
Development of
Financial Fragility
in the Australian
economy
Rise in debt to
GDP from 50%
to 135% 1960-
2000:
Minskian Economic History of Australia
Interest payments peaked in 1989/90
Corporate indebtedness decreased since 1990:

BUT Household debt levels rising
Minskian Economic History of Australia
BUT Corporate indebtedness decreased since 1990:
BUT overall fragility higher given debt repayments:
Minskian Economic History of Australia
AND situation of Sydney households worst in history
Debt & financial fragility has risen as Minsky predicted
Minskian Economic History of Australia
Household & corporate sector now more susceptible to
financial crisis than ever before
Minskian Economic History of Australia
Cyclical ratcheting up of gap between expenditure and debt over last
40 years
Household & corporate sector now net borrowers
A positive gap means that capital expenditures exceed available
internal funds. (153)
Modelling Financial Instability
Minskys verbal model appears confirmed by data
But (for better or worse!) only mathematical models
cut it with economists
Vigorous methodological debates about role of
mathematics in economics
Considered in History of Economic Thought
Whatever outcome of debate, reality is that
mathematical models are key part of rhetoric of
economics
If you cant say it with maths, economists wont
listen
Can this be modelled mathematically?
Yes but not with equilibrium tools
Need something like what Minsky tried: mathematical
models that incorporate time
Modelling Financial Instability
Mathematical models that incorporate time are
Differential equations
Difference equations
Not taught at undergraduate level in most universities
(including UWS)
Sometimes taught at advanced (Masters/PhD) level
But frequently at inadequate level
Modern sciences (biology, physics, maths itself) show
differential equations only able to model real-world
processes when they are
Nonlinear
Involve three or more variables (third order)
Most economics courses dont go beyond linear
second order equations
Modelling Financial Instability
Several attempts to model Minsky in literature
See references in final slide
My model based on Goodwins trade cycle model (next
slide)
Key component of dynamic model is rate of change
of x with respect to time
Mathematically shown as dx/dt:
( ) =
dx
f x
dt
Similar to calculus you have done in Maths 1.3 etc.; BUT
One key difference: calculus considers equations of form
( ) =
dy
f x
dx
Rate of change of dependent variable a
function of value of independent variable
Differential equations rate of change of
dependent variable a function of its own value
( )
=
dy
f y
dx
Modelling Financial Instability
Maths gets quite complicated (overview only here!); but
Dividing by dependent variable puts equation in
percentage change form:
( ) =
dx
f x
dt
Rate of change
( ) =
1 dx
g x
x dt
Percentage rate of change
% rate of change thinking therefore essentially dynamic
Often complicated models easily expressed in percentage
rate of change terms
Applying this to model a cyclical economy
The natural starting place for analyzing the relation
between debt and income is to take an economy with a
cyclical past that is now doing well (Minsky 1982: 65)
Modelling Financial Instability
First stage: Goodwins model (of Marxs
cyclical growth theory)
Causal chain
Capital (K) determines Output (Y)
Output determines employment (L)
Employment determines wages (w)
Wages (wL) determine profit (P)
Profit determines investment (I)
Investment I determines capital K
chain is closed
=
K
Y
v
accelerator
=
Y
L
a
p
r
o
d
u
c
t
i
v
i
t
y

| |
=
|
\ .
dw L
w f
dt N
P
h
i
l
l
i
p
s

c
u
r
v
e

H = Y w L
H
| |
=
|
\ .
I k
K

H
| |
=
|
\ .
dK
k Y K
dt K
Investment
function
Depreciation
Modelling Financial Instability
Goodwins model reduces to two % rate of change
expressions:

o |

=
1
GDP
d
g
dt
( )
e
o
e
=
1 d
P
dt
% rate of change of employment rate
equals % rate of economic growth
minus % rate of population growth and
technical change
% rate of change of wages share of
GDP equals % increase in wages
(Phillips curve) minus % rate of
technical change
Employment will rise if the rate of economic growth
exceeds the sum of population growth & technical change
Workers share of output will rise if the increase in wages
exceeds the rate of technical change
Modelling Financial Instability
Click on graph to run it dynamically
Adding debt relatively easy:
Modelling Financial Instability
Debt finances investment
Debt will grow if desired investment exceeds retained
earnings
Interest is paid on outstanding debt:
= H
dD
I
dt
H = Y W r D
where
Adds 3
rd
% rate of change expression:
( )

= +
1
GDP
d I Y W
d r g
d dt D
The debt to output ratio will
grow if the rate of interest
exceeds the rate of growth and
investment exceeds EBIT
Modelling Financial Instability
Generates
system which
can be stable
if starts near
equilibrium:
0 10 20 30 40 50
0.75
0.8
0.85
0.9
0.95
1
Wages Share Equilibrium
Wages Share 1% deviation
Employment Equilibrium
Employment 1% deviation
Goodwin with Debt: Stable
Years
P
e
r

c
e
n
t
0.955 0.96 0.965 0.97 0.975 0.98
0.79
0.8
0.81
0.82
0.83
0.84
0.85
Equilibrium Pair
Cycle 1% deviation
Goodwin with Debt: Stable
Employment
W
a
g
e
s

S
h
a
r
e
0 10 20 30 40 50
3.8
3.75
3.7
3.65
3.6
Debt to Output Equilibrium
Debt to Output 1% deviation
Goodwin with Debt: Stable
Years
R
a
t
i
o

t
o

G
D
P
Debt Stabilises
e
1

1
, d
1
,
( )
But which can
suffer debt-
induced
breakdown if
far from
equilibrium
Modelling Financial Instability
Exactly the
same model;
Different
initial
conditions:
0 50 100 150 200 250 300
0.4
0.6
0.8
1
1.2
1.4
1.6
Wages Share Equilibrium
Wages Share Non-equilibrium
Employment Equilibrium
Employment Non-equilibrium
Goodwin with Debt: Unstable
Years
P
e
r

c
e
n
t
0.6 0.7 0.8 0.9 1 1.1
0.4
0.6
0.8
1
1.2
1.4
1.6
Equilibrium Pair
Cycle Non-equilibrium
Goodwin with Debt: Unstable
Employment
W
a
g
e
s

S
h
a
r
e
0 50 100 150 200 250 300
4
2
0
2
4
6
Debt to Output Equilibrium
Debt to Output 1% deviation
Goodwin with Debt: Unstable
Years
R
a
t
i
o

t
o

G
D
P
Debt Explodes
e
2

2
, d
2
,
( )
Cyclical
pattern of
debt to output
very similar to
data on US and
Australian
economies:
Modelling Financial Instability
Click on graph to run it dynamically
Model replicates Minskys verbal description of free
market (no government) capitalist economy
What about mixed economy?
Modelling Financial Instability
Add in government sector with spending a
function of unemployment rate:
( ) =
1 dG
g
G dt
( ) =
1
GDP
dg
g g
g dt
% rate of change of government spending
is a function of the rate of employment
Results in 4
th
rate of change expression:
The government spending to output
ratio will grow if the rate of growth of
government spending exceeds the rate
of economic growth
Modelling Financial Instability
Results in model which is cyclical but not unstable:
Employment rate
Time (Years)
0 100 200 300 400
0
.5
1.0
1.5
2.0
Wage Share
Time (Years)
0 100 200 300 400
.6
.7
.8
.9
1.0
1.1
Limit Cycle
.6 .725 .85 .975 1.1
.80
.85
.90
.95
1.00
1.05
Debt/Output
Time (Years)
0 100 200 300 400
-2
0
2
4
Government spending to output
Time (years)
0 100 200 300 400
-.20
.05
.30
.55
.80
Modelling Financial Instability
How does model compare to reality?
Real world a mixture of free market & mixed
economy models
Model government holds the line on unemployment
Real-world ones progressively reduced commitment
to employment since WWII
Models investment (etc.) parameters fixed
Real world (and Minskys) behaviours evolve over time
more speculation as memory of crisis recedes
No price dynamics in model
Real-world inflation can reduce debt burden
But deflation increases it
Price dynamics can be added to model
Modelling Financial Instability
Minsky prognosis for world/Australian economies
Debt levels now at historic highs
Inflation now close to zero (except for oil, China
impact on raw material pricessteel etc.)
Government anti-cyclical spending weakened by 30
years of neoclassical economic policy
Recessions inevitable (economy fundamentally cyclical)
Next one could be extended by impact of
Substantial debt levels
Low or falling prices
Precursor: Japans economic crisis 1990-2005
Next week: A managerial look at finance
Finale: to run Minsky models dynamically, install Vissim
viewer (on WebCT) and run Vissim models
References
Minsky Models
Deleplace, G. & Nell, E.J. (eds.), 1996, Money in Motion: The Post Keynesian and Circulation
Approaches, Macmillan, London.
Deleplace, G. & Nell, E.J., 1996b Monetary Circulation and Effective Demand, in Deleplace,
G. & Nell, E.J. (1996a).
Desai, M., 1973, Growth Cycles and Inflation in a Model of the Class Struggle, Journal of
Economic Theory, Vol. 6, 527-545.
Desai, M., 1995, An Endogenous Growth-Cycle with Vintage Capital Economics of Planning,
Vol 28, Iss 2-3, 87-91.
Jarsulic, M., 1989, Endogenous credit snd endogenous business cycles, Journal of Post
Keynesian Economics, Vol. 12, 35-48.
Keen, S., 1995. Finance and economic breakdown: modelling Minskys Financial Instability
Hypothesis, Journal of Post Keynesian Economics, Vol. 17, No. 4, 607-635.
Keen, S., 1996. The chaos of finance, Economies et Societes, Vol. 30, special issue Monnaie
et Production No. 10, 55-82.
Keen, S., 1997. From stochastics to complexity in models of economic instability, Nonlinear
Dynamics, Psychology and Life Sciences, Vol. 1, No. 2, 151-172.
Keen, S., 1999. The nonlinear dynamics of debt deflation, Complexity International, Volume
6: http://journal-ci.csse.monash.edu.au/ci/vol06/keen/keen.html.
Keen, S., 2000. The nonlinear economics of debt deflation, in Barnett, W., Chiarella, C.,
Keen, S., Marks, R., Schnabl, H., (eds.), Commerce, Complexity and Evolution, Cambridge
University Press, 83-110.
Skott, P., 1989, Effective Demand, Class Struggle and Cyclical Growth, International
Economic Review, Vol. 30 No. 1, 231-247.
Goodwin, R.M., 1950, A non-linear theory of the cycle, Review of Economics and Statistics, Vol.
32, 316-320.
Goodwin, R.M., 1967, A Growth Cycle, in Feinstein, C.H. (ed.), Socialism, Capitalism and Economic
Growth, Cambridge University Press, Cambridge, 54-58. Reprinted in Goodwin, R.M., 1982, Essays
in Dynamic Economics, MacMillan, London.