Debt and Investment in the Keen Model: a Reappraisal of Modeling Minsky

Dette et Investissement dans le modèle de Keen: quelle modélisation de Minsky ?

Adrien Nguyen-Huu and Antonin Pottier

Working Papers from HAL

Abstract: We examine to which extent the Keen model (Keen 1995) is a faithful modelling of Minsky's Finance Instability Hypothesis. We focus on debt, money, and debt-induced crisis. We propose a clear interpretation of the debt: households lend unconsumed income to firms to finance their investments, and money creation is not necessary. We offer a detailed description of the economic collapse and analyse its causes thanks to numerical experiments. The crisis is triggered by profits squeezed by wages and not by debt overhang. We test alternative assumptions on the investors' behaviour to show that behaviour at very low profits is fundamental. We conclude that the Keen crisis has few Minskian flavours.

Keywords: Keen model; financial crisis; Minsky; endogenous money; investment; debt (search for similar items in EconPapers)
Date: 2016-08-31
New Economics Papers: this item is included in nep-pke
Note: View the original document on HAL open archive server: https://hal.science/hal-01376552v1
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Citations: View citations in EconPapers (5)

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Journal Article: Debt and investment in the Keen model: a reappraisal of modelling Minsky (2017)
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