Technology Shocks and Predictable Minsky Cycles
Bibliographic Data
| ID | 9702991 |
|---|---|
| Authors | Jean-Paul L’Huillier (0000-0002-5235-1158, Federal Reserve Bank of Cleveland & Brandeis University , USA, corresponding author), Gregory Phelan (0000-0003-1961-0143, Williams College), Hunter Wieman (Princeton University) |
| Year | 2024 |
| Volume | 134 |
| Issue | 658 |
| Pages | 811-836 |
| Publication date | 2024-01-29 |
| Peer Reviewed | Yes |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | The Economic Journal (JOURNAL) |
| Journal identifiers | ISSN: 0013-0133 • E-ISSN: 1468-0297 |
| Publisher | Oxford University Press (PUBLISHER • GB) |
| DOI | 10.1093/ej/uead085 |
| OpenAlex | W4387426621 |
| Language | EN |
| References cited | 37 |
Big technological improvements in a new, secondary sector lead to a period of excitement about the future prospects of the overall economy, generating boom-bust dynamics propagating through credit markets. Increased future capital prices relax collateral constraints today, leading to a boom before the realisation of the shock. But reallocation of capital toward the secondary sector when the shock hits leads to a bust going forward. These cycles are perfectly foreseen in our model, making them markedly different from the typical narrative about unexpected financial shocks used to explain crises. Our dynamics obtain without a departure from rational expectations. In fact, these cycles echo Minsky’s original narrative for financial cycles, according to which ‘financial trauma occur [sic] as normal functioning events in a capitalistic economy’ (Minsky, 1980, p. 21)
Boom · Bust · Capital (architecture · Collateral · Economics · Keynesian economics · Macroeconomics · Monetary economics · Shock (circulatory · Economic Theory and Policy · Finance · Housing, Finance, and Neoliberalism
| Citation velocity | historical |
|---|---|
| Highly cited | No |