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One implication of the SES indicator is that a firm is considered “systemically risky” if it faces a high probability of capital shortage when the financial sector is weak. [6] Another gauge of financial stability is the distribution of systemic loss, which attempts to fill some of the gaps of the aforementioned measures. This measure ...
The more general concept of a "Minsky cycle" consists of a repetitive chain of Minsky moments: a period of stability encourages risk taking, which leads to a period of instability when risks are realized as losses, which quickly exhausts participants into risk-averse trading (de-leveraging), restoring stability and setting up the next cycle.
A permacrisis refers to a prolonged state of instability where crises do not fully resolve but become quasi-permanent conditions. This term has been used to describe enduring situations such as chronic socioeconomic inequalities, continuous environmental degradation, or a perceived global democratic decline.
Thomas I. Palley, "The Limits of Minsky's Financial Instability Hypothesis as an Explanation of the Crisis," Monthly Review, Volume 61, Issue 11 (April 2010). Thomas I. Palley, "A Theory of Minsky Super-Cycles and Financial Crises," Contributions to Political Economy , 30 (1), 31 – 46.
A vine copula can be used to model systemic risk across a portfolio of financial assets. One methodology is to apply the Clayton Canonical Vine Copula to model asset pairs in the vine structure framework. As a Clayton copula is used, the greater the degree of asymmetric (i.e., left tail) dependence, the higher the Clayton copula parameter.
A primary theory in this vein is the debt deflation theory of Irving Fisher, which he proposed to explain the Great Depression. A more recent complementary theory is the Financial Instability Hypothesis of Hyman Minsky, and the credit theory of economic cycles is often associated with Post-Keynesian economics such as Steve Keen.
The political concerns in Italy are spreading across markets causing serious pressure on the banking sector. Global equities have lost about 1.5% in the past 24 hours and risk aversion has ...
US federal minimum wage if it had kept pace with productivity. Also, the real minimum wage. Real macroeconomic output can be decomposed into a trend and a cyclical part, where the variance of the cyclical series derived from the filtering technique (e.g., the band-pass filter, or the most commonly used Hodrick–Prescott filter) serves as the primary measure of departure from economic stability.