Financial Structure and Instability in an Open Economy

Kenshiro Ninomiya

No 16, Discussion Papers CRR Discussion Paper Series B: Financial from Shiga University, Faculty of Economics,Center for Risk Research

Abstract: The subprime loan mortgage crisis has revived scholarly interest in Minsky's financial instability hypothesis. The related mathematical models present two types of Minskian financial structures, which we identify as the lenders' risk type (LR) and the hedge, speculative and Ponzi type (HSP)We construct macrodynamic models in a fixed and floating exchange rate sys- tem which considers both the LR and HSP financial structures. We examine the effects of international capital mobility and international lenders' risks and demonstrate the significance of the LR and HSP financial structures in the fixed and floating exchange rate system. We emphasize the significance of stable financial structures in order to stabilize dynamic systems in an open economy.

Keywords: Minskian financial structure; financial fragility; financial instability; international capital mobility (search for similar items in EconPapers)
JEL-codes: E12 E32 E43 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2017-02
New Economics Papers: this item is included in nep-hpe, nep-mac, nep-opm and nep-pke
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Persistent link: https://EconPapers.repec.org/RePEc:shg:dpapeb:16

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