Does the Eurozone live in a Minskyan world?

Sebastien Charles

Research in Economics, 2024, vol. 78, issue 4

Abstract: The purpose of this paper is to test Minsky's financial instability hypothesis for the Eurozone by focusing on his main conclusion: corporate debt ratios rise during the ascendant phase of the business cycle. Depending on how debt ratios are measured, our results are divided between (i) robust and (ii) imperfect empirical evidence of procyclical debt ratios. Moreover, we suggest that rising interest rates may not be the best policy to avoid a Minskyan process and that alternative measures deserve some attention. We believe these results call for future research.

Keywords: Debt ratio; Eurozone; Minsky; Structural break (search for similar items in EconPapers)
JEL-codes: C22 E12 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:reecon:v:78:y:2024:i:4:s1090944324000486

DOI: 10.1016/j.rie.2024.100984

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