Profits, Confidence and public deficits: modeling Minsky's institutional dynamics
Year: 2005
Type: article
Abstract: In this paper, we present a Minskyan model that deals explicitly with the influence of the institutional dynamics on the relation between finance, investment, and economic fluctuations. We show that stabilization policy can be efficient in certain cases--namely, when fiscal policy is sensitive enough to variations in private investment. In contrast, the economy is unstable when the deficit constraint is not flexible enough. These results, which echo recent debates and proposals on budget deficit rules in the Economic and Monetary Union, are fully consistent with the way Minsky considered that public authorities should "stabilize an unstable economy."
Authors: Eric Nasica, Alain Raybaut
Institution: Groupe de Recherche en Droit, Économie, Gestion
Language: English
Topic: Economic Theory and Policy
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W1486791380