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Aggregate Determinants of Financial Instability

  • Marc Jarsulic
Chapter
Part of the The Jerome Levy Economics Institute Series book series (JLEI)

Abstract

There is a growing body of theoretical literature which analyzes the connections between financial factors and macroeconomic stability. Following Minsky (1982), some authors (Franke and Semmler, 1989; Taylor and O’Connell, 1985) emphasize the importance of expectations. They connect expectations of future profitability to endogenously determined interest rates. For some configurations of parameters, the effects of expectations on aggregate demand can create instability and self-reinforcing declines in aggregate activity.

Keywords

Interest Rate Cash Flow Business Cycle Capital Accumulation Local Stability 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Copyright information

© Ghislain Deleplace and Edward J. Nell 1996

Authors and Affiliations

  • Marc Jarsulic

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