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Does the Eurozone live in a Minskyan world?

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  • Charles, Sébastien

Abstract

The purpose of this paper is to test Minsky's financial instability hypothesis for the Eurozone by focusing on his main conclusion: corporate debt ratios rise during the ascendant phase of the business cycle. Depending on how debt ratios are measured, our results are divided between (i) robust and (ii) imperfect empirical evidence of procyclical debt ratios. Moreover, we suggest that rising interest rates may not be the best policy to avoid a Minskyan process and that alternative measures deserve some attention. We believe these results call for future research.

Suggested Citation

  • Charles, Sébastien, 2024. "Does the Eurozone live in a Minskyan world?," Research in Economics, Elsevier, vol. 78(4).
    • Handle: RePEc:eee:reecon:v:78:y:2024:i:4:s1090944324000486
    DOI: 10.1016/j.rie.2024.100984
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    More about this item

    Keywords

    Debt ratio; Eurozone; Minsky; Structural break;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory

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