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¡ªby
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¡ªnot a
model of the whole economy. However, such partial models can be used to
anticipate financial bubbles¡ªhence bank runs and recessions due to bank
runs¡ªwhich typically follow.
%K Economic Recessions %K Financial Bubbles %K Bank Panics %U http://www.scirp.org/journal/PaperInformation.aspx?PaperID=42804