Hyman Minsky pioneered the idea of the financial instability hypothesis to explain how swings between robustness and fragility in financial markets generate business cycles in the economic system. Therefore, in his model business cycles and instability are endogenous. The problem now is how to put his idea of financial instability into a working model which can be tested with empirical data. Such a Minskyan model is quite rare, though some economists have proposed have tried to achieve that. For example, Toichiro Asada suggested generalized Lotka-Volterra nonlinear systems of equations as a model for Minskyan cycles.
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[v1] 2017-01-10 07:43:01
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