From the Financial Instability Hypothesis to the theory of Capital Market Inflation: a structural interpretation of the sub-prime crisis

Eugenio Caverzasi

No 18, DEM Working Papers Series from University of Pavia, Department of Economics and Management

Abstract: The aim of this paper is to develop a structural explanation of the subprime mortgage crisis, grounded on the combination of two apparently incompatible financial theories: the Financial Instability Hypothesis by Hyman P. Minsky and the theory of Capital Market Inflation by Jan Toporowski. The theoretical analysis - presented in the first part of the paper - will then be reproduced in a Stock Flow Consistent model, to test its coherence, both logical and with respect to stylized facts in the U.S. economy.

Pages: 50 pages
Date: 2012-11
New Economics Papers: this item is included in nep-pke
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Persistent link: https://EconPapers.repec.org/RePEc:pav:demwpp:018

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