Speculation, financial fragility and stock-flow consistency

Michell, Jo

Abstract

This paper uses a simple stock-flow consistent accounting framework as the basis for an analysis of the speculative financial behaviour of firms and households during a period of rising asset prices. Some shortcomings of Minsky’s theory of the business cycle are highlighted, both from a theoretical point of view and with respect to the stylised facts of the period preceding the crisis of 2007–08. An alternative mechanism is proposed, based on Toporowski’s “post-modern business cycle”, in which asset price inflation leads to redistribution of income at the intra-sectoral level.

Citation

Michell, J. (2014). Speculation, financial fragility and stock-flow consistency. In R. Bellofiore, & G. Vertova (Eds.), The Great Recession And The Contradictions Of Contemporary CapitalismEdward Elgar

• Publication Date: Dec 1, 2014
• Peer Reviewed: Peer Reviewed
• Series Title: New Directions in Modern Economics
• Book Title: The Great Recession And The Contradictions Of Contemporary Capitalism
• ISBN: 9780857938527
• Keywords: money, finance, stock-flow consistent models, Minksy
• Publisher URL: http://www.e-elgar.co.uk/bookentry_main.lasso?currency=US&id=14637