Financial Assets, Debt and Liquidity Crises

by Charpe, Matthieu; Chiarella, Carl; Flaschel, Peter; Semmler, Willi

• ISBN13: 9781107004931
• ISBN10: 1107004934
• Format: Hardcover
• Copyright: 2011-08-22
• Publisher: Cambridge Univ Pr

Summary

The macroeconomic development of most major industrial economies is characterised by boom-bust cycles. Normally such boom-bust cycles are driven by specific sectors of the economy. In the financial meltdown of the years 20072009 it was the credit sector and the real-estate sector that were the main driving forces. This book takes on the challenge of interpreting and modelling this meltdown. In doing so it revives the traditional Keynesian approach to the financial-real economy interaction and the business cycle, extending it in several important ways. In particular, it adopts the Keynesian view of a hierarchy of markets and introduces a detailed financial sector into the traditional Keynesian framework. The approach of the book goes beyond the currently dominant paradigm based on the representative agent, market clearing and rational economic agents. Instead it proposes an economy populated with heterogeneous, rationally bounded agents attempting to cope with disequilibria in various markets.

Table of Contents

List of figures

List of tables

Notation

Preface

Financial crises and the macroeconomy

The Nonlinear Dynamics of Credit and Debt Default

Currency crises, credit crunches and large output loss

Mortgage loans, debt default and the emergence of banking crises

Debt deflation and the descent into economic depression

Theoretical Foundations for Structural Macroeconometric Model Building

Keynesian macroeconometric model building: a point of departure

Intensive form and steady state calculations

Partial feedback structures and stability issues

Debt Crises: Firms, Banks and the Housing Markets

Debt deflation: from low- to high-order macrosystems

Debt default, bankruptcy of firms, and banks' performances

Japan's institutional configuration and its financial crisis

Housing investment cycles, workers' debt and debt default

Bibliography

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