We develop a quantitative equilibrium model of financial crises to assess the interaction between ex-post interventions in credit markets and the buildup of risk ex ante. During a systemic crisis, bailouts relax balance sheet constraints and mitigate the severity of the recession. Ex ante, the...

How to stimulate the economy by credit creation without causing financial instability is the main thrust of this book. In order to accomplish this goal, the author suggests, contrary to the accepted, albeit conventional, academic paradigm, doing away with the Efficient Market Hypothesis and...

The Nature of Manias, Bubbles and Crashes: Introduction -- Value Trading vs. Momentum Trading -- The Rise of Manias and Bubbles -- Stages in the Boom-Bubble-Bust Sequence -- Fueling the Boom - Role of the Media -- Bubbles, Wealth and Inflation -- Speculations, Bootstraps and Swindles -- The...

The profound influence of the 2008 financial crisis has renewed interests in the financial instability hypothesis of Minsky, which attributes financial crisis to credit-intensive booms. This paper investigates the relationship between credit growth and the probability of a banking crisis based...