Explaining Financial Crises : A Cyclical Approach
Radke, Marc Peter
Explaining Financial Crises : A Cyclical Approach - Bern Peter Lang International Academic Publishing Group 2018 - 1 electronic resource (430 p.)
Open Access
This book develops a new theoretical approach to the explanation of systemic financial crises in industrial and emerging market countries. In contrast to standard models, the present cyclical approach is consistent with the following three stylized facts. Firstly, systemic financial crises are a recurrent phenomenon generally accompanied by excessive boom-bust cycles. Secondly, the frequency of financial crisis cycles is very irregular. Thirdly, most financial crisis cycles are initiated by positive shocks to profit expectations which induce an unsustainable build-up of financial fragility driven by irrational exuberance. The present approach is based on a sophisticated balancesheet structure with many assets, as well as on an expectation formation scheme which combines the rational expectations hypothesis with Keynes’ Beauty Contest Theory.
Creative Commons
English
b13957
10.3726/b13957 doi
Economic theory & philosophy
Monetary economics
Approach Beauty Contest Theory Crises Cyclical Explaining Financial Financial Crises Financial Stability Long-Run Rationality Radke Theorie Währungskrise
Explaining Financial Crises : A Cyclical Approach - Bern Peter Lang International Academic Publishing Group 2018 - 1 electronic resource (430 p.)
Open Access
This book develops a new theoretical approach to the explanation of systemic financial crises in industrial and emerging market countries. In contrast to standard models, the present cyclical approach is consistent with the following three stylized facts. Firstly, systemic financial crises are a recurrent phenomenon generally accompanied by excessive boom-bust cycles. Secondly, the frequency of financial crisis cycles is very irregular. Thirdly, most financial crisis cycles are initiated by positive shocks to profit expectations which induce an unsustainable build-up of financial fragility driven by irrational exuberance. The present approach is based on a sophisticated balancesheet structure with many assets, as well as on an expectation formation scheme which combines the rational expectations hypothesis with Keynes’ Beauty Contest Theory.
Creative Commons
English
b13957
10.3726/b13957 doi
Economic theory & philosophy
Monetary economics
Approach Beauty Contest Theory Crises Cyclical Explaining Financial Financial Crises Financial Stability Long-Run Rationality Radke Theorie Währungskrise