TITLE

Disequilibrium Pricing Theory--Bubbles and Recessions

AUTHOR(S)
Betz, Frederick
PUB. DATE
February 2014
SOURCE
World Journal of Neuroscience;Feb2014, Vol. 4 Issue 1, p60
SOURCE TYPE
Academic Journal
DOC. TYPE
Article
ABSTRACT
How can one track a financial bubble as a likely precursor to bank panics and subsequent recessions? We model the Minsky-Keynes depiction of a financial market--by extending the "equilibrium-price" model to a "disequilibrium- price" model, through adding a third dimension of time. In this way, we use a topological graphic approach to see how the models from the two schools of economics, exogenous and endogenous, relate to each other as complementary models of production and financial sub-systems. These economic models are partial models in an economy--not a model of the whole economy. However, such partial models can be used to anticipate financial bubbles--hence bank runs and recessions due to bank runs--which typically follow.
ACCESSION #
94739639

 

Related Articles

  • Ágnes Csermely and Zoltán Szalai: The role of financial imbalances in monetary policy. Csermely, Ágnes; Szalai, Zoltán // MNB Bulletin;Jun2010, p6 

    One fundamental lesson of the financial crisis is that the evolution of financial imbalances may suggest overheating in the economy, which does not necessarily entail a rise in inflation. The bursting of these bubbles may result in an abrupt overshooting of the positive output gap in the...

  • Approximate CAPM When Preferences are CRRA. Herings, P.; Kubler, Felix // Computational Economics;Feb2007, Vol. 29 Issue 1, p13 

    In general equilibrium models of financial markets, the capital asset pricing formula does not hold when agents have von Neumann–Morgenstern utility with constant relative risk aversion. In this paper we examine under which conditions on endowments and dividends the pricing formula...

  • Why did policy ignore the harbingers of the crisis? Tichy, Gunther // Empirica;Feb2011, Vol. 38 Issue 1, p107 

    n analysis of the monetary authorities' reports for 2005 to 2007 reveals that they were well aware of the risks of the financial crisis. They, however, tended to overemphasise the risks outside their control and to neglect those, at least partially under their control. Central banks should and...

  • BUBBLES: Minsky's Dismal Moments.  // Fund Strategy;5/31/2011, p20 

    The article focuses on economist Hyman Minsky, who stated that economic bubbles are endogenous in financial markets and warned that the modern financial system is prone to generating crises and bubbles. Minsky described that bubbles end when the economy puts pressure on central banks to restrict...

  • Prologue.  // Journal of Performance Management;Mar2007, Vol. 20 Issue 1, p2 

    The article provides an overview of the establishment of the Association for Management Information in Financial Services (AMIfs) in the U.S. It is a preeminent organization for management information professionals in the financial services industry. The organization, which was founded in 1980,...

  • A computational study on general equilibrium pricing of derivative securities. Thijssen, Jacco J. J. // Annals of Finance;Oct2008, Vol. 4 Issue 4, p505 

    This paper analyses the accuracy of replicating portfolio methods in predicting asset prices. In a two-period, general equilibrium model with incomplete financial markets and heterogeneous agents, a computational study is conducted under various distributional assumptions. The focus is on the...

  • INSTITUTIONAL PORTFOLIO RESTRICTIONS, DIVERSE INVESTOR OPPORTUNITY SETS, AND SECURITIES MARKET EQUILIBRIUM. Glenn, David W. // Journal of Financial & Quantitative Analysis;Nov77, Vol. 12 Issue 4, p637 

    An abstract is presented for the report "Institutional Portfolio Restrictions, Diverse Investor Opportunity Sets, and Securities Market Equilibrium," by David W. Glenn.

  • Factors Influencing Bank Transparency: Case of Emerging Markets. Srairi, Samir; Douissa, Ismail Ben // British Journal of Management & Economics;2014, Vol. 4 Issue 4, p523 

    Using a random effect regression, this paper examines internal and external factors that may explain the differences of transparency across banks. Our sample is an unbalanced panel data of 69 commercial banks operating in seven emerging countries (Egypt, Lebanon, Malaysia, Morocco, Thailand,...

  • Norges Bank's Financial Stability Report.  // Financial Stability;2014, p5 

    The article focuses on the 2014 Financial Stability Report of the Norges Bank focusing on vulnerabilities and risks in the financial system. As mentioned, the report emphasizes several salient features of financial stability including the structural features of banks, financial markets and the...

Share

Read the Article

Courtesy of THE LIBRARY OF VIRGINIA

Sorry, but this item is not currently available from your library.

Try another library?
Sign out of this library

Other Topics