IDEAS home Printed from https://ideas.repec.org/a/mes/postke/v33y2010i1p61-82.html
   My bibliography  Save this article

Modeling financial crises: a schematic approach

Author

Listed:
  • John T. Harvey

Abstract

John Maynard Keynes argued that crises were systemic and that, unless serious reforms were implemented, they would tend to grow in frequency and severity. The paper sets out to build a Keynes-style model of crises that captures both the unique characteristics of each type and their common roots. A schematic method is employed that traces the processes in time and shows how events become interrelated and mutually causal. This permits us, as much as possible, to see everything at onceâa necessity when the buildup to a crisis may manifest itself in so many places.

Suggested Citation

  • John T. Harvey, 2010. "Modeling financial crises: a schematic approach," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 33(1), pages 61-82, October.
    • Handle: RePEc:mes:postke:v:33:y:2010:i:1:p:61-82
    as

    Download full text from publisher

    File URL: http://mesharpe.metapress.com/link.asp?target=contribution&id=9R54P5626656316U
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Stephen P. Dunn, 2001. "Bounded Rationality Is Not Fundamental Uncertainty: A Post Keynesian Perspective," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 23(4), pages 567-587, July.
    2. Daniel Kahneman & Dan Lovallo, 1993. "Timid Choices and Bold Forecasts: A Cognitive Perspective on Risk Taking," Management Science, INFORMS, vol. 39(1), pages 17-31, January.
    3. Ilene Grabel, 2003. "Averting crisis? Assessing measures to manage financial integration in emerging economies," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 27(3), pages 317-336, May.
    4. Gary A. Dymski, 1988. "A Keynesian Theory of Bank Behavior," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 10(4), pages 499-526, July.
    5. Lance Taylor, 2001. "Capital Market Crises: Liberalization, Fixed Exchange Rates and Market-Driven Destabilization," Palgrave Macmillan Books, in: Ha-Joon Chang & Gabriel Palma & D. Hugh Whittaker (ed.), Financial Liberalization and the Asian Crisis, chapter 3, pages 21-39, Palgrave Macmillan.
    6. L. Randall Wray, 1998. "Understanding Modern Money," Books, Edward Elgar Publishing, number 1668.
    7. John Harvey, 2002. "Keynes' Chapter Twenty-Two: A System Dynamics Model," Working Papers 200201, Texas Christian University, Department of Economics.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kohler, Karsten, 2019. "Exchange rate dynamics, balance sheet effects, and capital flows. A Minskyan model of emerging market boom-bust cycles," Structural Change and Economic Dynamics, Elsevier, vol. 51(C), pages 270-283.
    2. John Nkwoma Inekwe, 2019. "The exploration of economic crises: parameter uncertainty and predictive ability," Scottish Journal of Political Economy, Scottish Economic Society, vol. 66(2), pages 290-313, May.
    3. Karsten Kohler & Engelbert Stockhammer, 2023. "Flexible exchange rates in emerging markets: shock absorbers or drivers of endogenous cycles?," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 32(2), pages 551-572.
    4. Thomas Goda, 2017. "A comparative review of the role of income inequality in economic crisis theories and its contribution to the financial crisis of 2007-2009," Revista Finanzas y Politica Economica, Universidad Católica de Colombia, vol. 9(1), pages 151-174, February.
    5. Ricardo Crespo & Daniel Heymann & Pablo Schiaffino, 2015. "Dealing with uncertainty evolving beliefs, rationalizations & the origins of economic crises," Documentos de trabajo del Instituto Interdisciplinario de Economía Política IIEP (UBA-CONICET) 2015-8, Universidad de Buenos Aires, Facultad de Ciencias Económicas, Instituto Interdisciplinario de Economía Política IIEP (UBA-CONICET).
    6. Thomas Goda, 2013. "The role of income inequality in crisis theories and in the subprime crisis," Working Papers PKWP1305, Post Keynesian Economics Society (PKES).
    7. Oscar Pérez Rodriguez, 2014. "Inversión y endeudamiento en Colombia: un análisis de financiación y sostenibilidad," Revista CIFE, Universidad Santo Tomás, September.
    8. Švabovič Miroslav & Miškinis Algirdas, 2016. "A Quantitative Analysis of the Main Lithuanian Taxes and Their Optimisation During the Crisis," Ekonomika (Economics), Sciendo, vol. 95(3), pages 98-111, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jussi Ahokas, 2012. "Geographies of Monetary Economy and the European economic crisis," ERSA conference papers ersa12p437, European Regional Science Association.
    2. Korkut Erturk, 2003. "On the Changing Nature of Currency Crises," Working Paper Series, Department of Economics, University of Utah 2003_02, University of Utah, Department of Economics.
    3. Botond Kőszegi & Matthew Rabin, 2006. "A Model of Reference-Dependent Preferences," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 121(4), pages 1133-1165.
    4. Erik Stam & Roy Thurik & Peter van der Zwan, 2010. "Entrepreneurial exit in real and imagined markets," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 19(4), pages 1109-1139, August.
    5. L. Randall Wray, 2011. "Waiting for the Next Crash: The Minskyan Lessons We Failed to Learn," Economics Public Policy Brief Archive ppb_120, Levy Economics Institute.
    6. T. K. Das & Bing-Sheng Teng, 1998. "Time and Entrepreneurial Risk Behavior," Entrepreneurship Theory and Practice, , vol. 22(2), pages 69-88, January.
    7. Zellweger, Thomas & Sieger, Philipp & Halter, Frank, 2011. "Should I stay or should I go? Career choice intentions of students with family business background," Journal of Business Venturing, Elsevier, vol. 26(5), pages 521-536, September.
    8. Azzi, Sarah & Bird, Ron, 2005. "Prophets during boom and gloom downunder," Global Finance Journal, Elsevier, vol. 15(3), pages 337-367, February.
    9. Brett Fiebiger & Scott Fullwiler & Stephanie Kelton & L. Randall Wray, 2012. "Modern Monetary Theory: A Debate," Working Papers wp279, Political Economy Research Institute, University of Massachusetts at Amherst.
    10. Ilene Grabel & Gerald Epstein, 2003. "Capital Management Techniques in Seven Developing Countries During the 1990s: Lessons for Policy Makers," Research Briefs rb2003-3, Political Economy Research Institute, University of Massachusetts at Amherst.
    11. L. Randall Wray, 2013. "The Euro Crisis and the Job Guarantee: A Proposal for Ireland," Palgrave Macmillan Books, in: Michael J. Murray & Mathew Forstater (ed.), The Job Guarantee, chapter 7, pages 161-177, Palgrave Macmillan.
    12. Bernd Hayo & Doh Shin, 2002. "Popular Reaction to the Intervention by the IMF in the Korean Economic Crisis," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 5(2), pages 89-100.
    13. Stephanie Bell, 1999. "Functional Finance: What, Why, and How?," Economics Working Paper Archive wp_287, Levy Economics Institute.
    14. Bent Flyvbjerg & Alexander Budzier & Jong Seok Lee & Mark Keil & Daniel Lunn & Dirk W. Bester, 2022. "The Empirical Reality of IT Project Cost Overruns: Discovering A Power-Law Distribution," Papers 2210.01573, arXiv.org.
    15. Patricia Werhane & Laura Hartman & Dennis Moberg & Elaine Englehardt & Michael Pritchard & Bidhan Parmar, 2011. "Social Constructivism, Mental Models, and Problems of Obedience," Journal of Business Ethics, Springer, vol. 100(1), pages 103-118, April.
    16. Pavlina R. Tcherneva, 2008. "The Return of Fiscal Policy: Can the New Developments in the New Economic Consensus Be Reconciled with the Post-Keynesian View?," Economics Working Paper Archive wp_539, Levy Economics Institute.
    17. Phil Armstrong, 2020. "Can Heterodox Economics Make a Difference?," Books, Edward Elgar Publishing, number 19964.
    18. Paramonovs Sergejs & Ijevleva Ksenija, 2015. "The Role of Marketing Tools in the Improvement of Consumers Financial Literacy," Acta Universitatis Sapientiae, Economics and Business, Sciendo, vol. 27(1), pages 40-45, December.
    19. Sivan Frenkel & Yuval Heller & Roee Teper, 2018. "The Endowment Effect As Blessing," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 59(3), pages 1159-1186, August.
    20. Eladio Febrero & Maria-Angeles Cadarso, 2006. "Pay-As-You-Go versus funded systems. Some critical considerations," Review of Political Economy, Taylor & Francis Journals, vol. 18(3), pages 335-357.

    More about this item

    Keywords

    financial crisis; Keynes; Minsky;
    All these keywords.

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • G01 - Financial Economics - - General - - - Financial Crises

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mes:postke:v:33:y:2010:i:1:p:61-82. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/MPKE20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.