The Political Economy of Shadow Banking: Debt, Finance, and Distributive Politics under a Kalecki-Goodwin-Minsky SFC Framework

Eloy Fisher and Javier López Bernardo ()

Economics Working Paper Archive from Levy Economics Institute

Abstract: This paper describes the political economy of shadow banking and how it relates to the dramatic institutional changes experienced by global capitalism over past 100 years. We suggest that the dynamics of shadow banking rest on the distributive tension between workers and firms. Politics wedge the operation of the shadow financial system as government policy internalizes, guides, and participates in dealings mediated by financial intermediaries. We propose a broad theoretical overview to formalize a stock-flow consistent (SFC) political economy model of shadow banking (stylized around the operation of money market mutual funds, or MMMFs). Preliminary simulations suggest that distributive dynamics indeed drive and provide a nest for the dynamics of shadow banking.

Keywords: Political Cycles; Debt and Public Finance; Shadow Banking; Political Economy of Finance; Kaleckian Macrodynamics; Stock-Flow Consistent (SFC) Modeling; Political Macroeconomic Models (search for similar items in EconPapers)
JEL-codes: E12 E62 E63 H5 H6 P16 (search for similar items in EconPapers)
Date: 2014-05
New Economics Papers: this item is included in nep-hme, nep-mac, nep-pke and nep-pol
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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