Esta pesquisa tem como objetivo analisar a existência de condições econômicas e institucionais no que diz respeito a integração de mercado, convergência de políticas macroeconômicas e simetria a choques que possibilitem um processo mais robusto de cooperação e integração monetária e financeira no Mercosul Ampliado. O aprofundamento desse processo nessa região é importante pela elevada necessidade de financiamento de longo prazo que esses países possuem e pela significativa vulnerabilidade e fragilidade as quais eles são expostos. Por meio de análises histórico-institucionais e empíricas, observa-se que: (a) os países desse bloco regional têm avançado a passos lentos rumo a um processo mais robusto de cooperação e integração monetária e financeira regional; e, (b) embora o Mercosul Ampliado apresente diversos aspectos que favoreçam o aprofundamento desse processo, outros fatores fundamentais, tais como integração comercial e financeira intrarregional e simetria a choques no bloco, indicam desafios para o avanço dessa estratégia. Assim, o aprofundamento da cooperação e integração monetária e financeira regional no Mercosul Ampliado apresenta obstáculos que não são desprezíveis, mas que podem ser superados por meio da vontade política dos países envolvidos para realizar os esforços necessários para implementar essa estratégia. / This research aims to analyze the existence of economic and institutional conditions with respect to market integration, convergence of macroeconomic politics and symmetry to shocks that allow a more robust process of monetary and financial cooperation and integration in the Amplified Mercosur. The deepening of this process in this region is important for the high need for long-term financing that these countries have and for the significant vulnerability and fragility which they are exposed. Through historical-institutional and empirical analysis, it is observed that: (a) countries of this region have advanced at a slow pace towards a more robust process of regional monetary and financial cooperation and integration; and, (b) although the Amplified Mercosur presents several aspects that favor the deepening of this process, other key factors, such as intrarregional trade and financial integration and symmetry to shocks in the block, indicate challenges to the advance of this strategy. Thus the deepening of regional monetary and financial cooperation and integration in the Amplified Mercosur presents obstacles that are not negligible, but that can be overcome through political will of the countries involved to make the necessary efforts to implement this strategy.

Hyman Minsky’s Financial Instability Hypothesis is used to construct two different indices for financial instability: a long-term index (Long Term Financial Instability) and a short-term index (Short Term Financial Instability). The former focuses on the underlying fragility of financial structures of units in the economy while the latter focuses on more immediate developments and manages to follow turmoil – “a financial crisis” – in the economy. The interplay of the indices with each other, with economic growth and with Foreign Direct Investment, both in general and in the financial industry, is probed. In short, we find that long term financial stability, i.e. secure financial structures in the economy or a low level of Long Term Financial Instability, is sacrificed for maintaining short term financial stability. However, more Long Term Financial Instability is associated, as Minsky expected, with more fluctuations in Short Term Financial Instability: market turmoil is more common the more fragile underlying financial structures of units in the economy are. This signals that markets are ruled by short-termism. Economic growth is harmed by Short Term Financial Instability but the effects of Long Term Financial Instability are weaker. The common expectation that FDI activities strengthen financial stability is not confirmed. The relationship found hints rather in the opposite direction: FDI activities seem to cause financial instability. Based on the those investigations and a further empirical work using data from Iceland, Leigh Harkness’s Optimum Exchange Rate System (OERS) is developed further with the intention of solving “The Policy Problem” as described by Minsky. Insights from control theory are used. The OERS, along with public debt management as carried out by Keynes, is argued to have the ability to keep economic activity in the state of a permanent “quasi-boom”. The policy implications are that the OERS should be considered as a monetary policy as it permits a free flow of capital, thereby allowing economies to reap the possible positive benefits of foreign direct investment, while still conserving financial stability.

We augment a model of endogenous credit cycles by Matsuyama et al.(2016) with human capital to study the impact of human capital on the stability of central economic aggregates. Thus we offer a linkage between human capital formation and credit market instability on a macrolevel combined with an analysis of functional income distribution. Human capital is modelled as pure external effect of production following a learning-by-producing approach. Agents have access to two different investment projects, which differ substantially in their next generations spillover effects. Some generate pecuniary externalities and technological spillovers through human capital formation whereas others fail to do so and are subject to financial frictions. Due to this endogenous credit cycles occur and a pattern of boom and bust cycles can be observed. We explore the impact of human capital on the stability of the system by numerical simulations which indicate that human capital has an ambiguous effect on the evolution of the output. Depending on the strength of the financial friction and the output share of human capital it either amplifies or mitigates output fluctuations. This analysis shows that human capital is an essential factor for economic stability and sustainable growth as a high human capital share tends to make the system's stability robust against shocks. / Series: Department of Economics Working Paper Series

The purpose of this thesis is to construct an endogenous macroeconomic model explaining the cause of financial cycles and systemic instability based on the financial instability hypothesis (FIH) published by Hyman Minsky (1982). FIH maintains that capitalist financial systems have an inherent disposition to fi- nancial instability because periods of economic prosperity encourage borrowers and lenders to be increasingly reckless which in turn lead to the formation of financial bubbles. The problem is approached by employing an adaptive ex- pectations model based on stylized facts from Kaldor's and Kalecki's models with addition of behavioral equations implemented in an attempt to simulate market expectations. JEL Classification E02, E11, E32 Keywords Instability, Macromodel, Cycles Author's e-mail ales.z@hotmail.com Supervisor's e-mail jaromir.baxa@fsv.cuni.cz

We extend sociodynamic modeling of the financial business cycle to the Euro Area and Japan. Using an opinion-formation model and machine learning techniques we find stable model estimation of the financial business cycle using central bank lending surveys and a few selected macroeconomic variables. We find that banks have asymmetric response to good and bad economic information, and that banks adapt to their peers' opinions when changing lending policies.

Purpose – The purpose of this research project is to explore the research question – how does the pursuit of agenda of regulatory reforms, post the crisis, influence governance arrangements at banks and assist them in maintaining resilience during subsequent episodes of crises?Research methodology – The project adopts a comparative case study approach involving a mixture of review of secondary resources and fieldwork interviews across East Asian nations. Findings – The project applied the Minskian Financial Instability Hypothesis to the 1997 East Asian crisis. It explored the macro-economic and policy environment during 1990s for highlighting institutional failures at the heart of the crisis. The interview findings offered contextual setting and diverse perspectives for regulatory reforms aimed at improving bank governance, post the crisis. The experience of case study banks outlined the impact of regulatory reforms on banking business models, post the crisis. The role of post-1997-crisis regulatory reforms in bringing about East Asian resilience, during the 2007 crisis, is thus analysed in the research project. Practical implications – The research project provides emerging economy perspective to regulatory reforms and offers policy-level recommendations for banks, regulatory authorities, corporate borrowers, and statutory auditors in maintaining governance standards conductive to financial stability in the long run. Originality – The project claims originality of application, interpretation and evaluation (which are considered as building blocks for “academic contribution”) of an important academic theory in the context of financial crises – Minsky’s Financial Instability Hypothesis. It integrates the aspects of financial instability, regulatory reforms and bank governance in the context of East Asian financial crisis by introducing the concept of “economic responsibilities” of market participants from emerging economies.

This research aims to understand the effect of business models in the Asian banking industry during the most recent financial crisis, and to identify effective banking business models for the post-crisis landscape. This research was based on observations about the importance of the bank business model for reaching bank stability, as well as a lack of research that focuses on Southeast and East Asia. Its main originality is in the application of existing stability models to banks in Asia, which has rarely been tested. The research uses an econometric approach, with several methods selected (including pooled OLS, robust fixed effects, and time fixed effects) on base models. Three hypotheses were posed, tested conditions of bank stability related to diversification strategy, use of interest and non-interest income, and strength of the bank balance sheet indicators. Bank performance was modelled using seven indicators grouped in three categories (Stability, Performance, and Stock returns). The outcome of testing variables was mixed. Diversification was shown to have a nonlinear effect on bank outcomes in most cases. However, excessive diversification could be harmful. Similar results were found for the effect of Interest and Non-interest income on the indicator outcomes. The third test showed that the Cost-to-income ratio and Total assets were key balance sheet indicators, but other variables tested were not significant. Overall, the findings of the research imply that banks do need to consider their business models, since these do affect performance of the bank in economic crisis situations and overall bank stability. Also, it can be concluded that the traditional relationship banking with strong balance sheet and effective risk management system is the most appropriate model in Southeast and East Asia.

Through the study's analysis with background to theories and previous research, it turns out that financial instability is hidden in boom and economic stability. Where causes are speculation, optimism, risk-taking and credit expansion. Minsky (1982a) pointed out, among other things, that high debt ratio increases the risk of financial instability, which is an effect of the lavish lending, partly as a result of global financing. The purpose of this study is to investigate whether there was a state of financial instability prior to Sweden's crises, focusing on Sweden's three most recent crises: the financial crisis of 1990, the IT bubble of 2000 and the financial crisis of 2008. The study illustrates how Minsky's financial instability hypothesis that "stability breeds instability" also can explain the emergence of Swedish crises. The result shows that there is a clear link between increased debt before crises. / Genom studiens analys med bakgrund till teorier och tidigare forskning visar det sig att finansiell instabilitet döljer sig i högkonjunktur och ekonomisk stabilitet. Där orsaker som ligger till grund är spekulation, optimism, risktagning och kreditexpansion. Minsky (1982a) pekade bland annat på att hög skuldkvot ökar risken för finansiell instabilitet, något som är en effekt av den frikostiga kreditgivningen, bland annat som en följd av den globala finansieringen. Syftet med denna studie är att undersöka om där funnits ett tillstånd av finansiell instabilitet innan Sveriges kriser, med fokus på Sveriges tre senaste kriser: finanskrisen 1990, it-bubblan 2000 och finanskrisen 2008. Studien åskådliggör hur Minskys finansiella instabilitetshypotes om att "stability breeds instability" även kan förklara uppkomsten av svenska kriser. Resultatet visar på att det finns ett tydligt samband mellan ökad skuldsättning innan kriser.

Following the collapse of property values and an increasing rate of default on high-risk mortgages, the United States experienced a subprime lending crisis that led to massive financial losses for holders of mortgage-backed securities. The purpose of this correlational study was to examine if loan product and loan amount predict the likelihood of loan foreclosure. The theoretical framework grounding the study was Minsky's financial instability hypothesis, which describes the basis of capitalism as economic expansionism followed by financial crises. The population consisted of 473 loan cases from archival data of the Atlanta Sixth Federal Reserve District in Georgia. The method used to collect the data was a probabilistic simple random sample taken from the archival data. The use of binary logistic regression resulted in a finding that the variables of loan product and loan amount significantly predicted the likelihood of loan foreclosure, Ï?2(4) = 10.65, p = .031, Nagelkerke R2 = .09. The Nagelkerke R2 value indicated that the model explained 9% of the variability in foreclosure. The findings specifically showed that Federal Housing Authority and Veterans Administration loan products were significantly more likely than conventional loans to cause losses for mortgage lenders. The implications for positive social change include increased stakeholder knowledge of various factors that can contribute to foreclosure and sustainment of community value with fewer homeowners losing their home in foreclosure.

Share repurchases reached a decade-high level in 2019, just as US equity indices reached a historical zenith, a move in tandem that supports more than merely a correlative relation. However, this relationship moves beyond that of just a close tandem move in indices alongside share repurchases, but to the behavior of firms which began to leverage themselves in order to promote the evermore profitable strategy of large buyback programs. Those repurchases indicate an idiosyncratic and procyclical leveraging that, while much smaller in scope and less combustible by lack of derivative amplification, led to the gorging on unsustainable debt described by Hyman Minsky and experienced in the Great Financial Crisis in the banking industry. In this case, the 'Minsky moment' that may have inevitably popped the self-promotion bubble came in the form of the 'black swan' event of the coronavirus outbreak. This paper aims to historically frame the issues, with delimitation of the effect of buybacks from 2009 to early 2020 with scant reference to historical factors influencing the increased usage of share repurchase programs. The analysis within this historical scope will reflect empirical measures on the market-wide level of share buybacks and debt levels alongside the concurrent equity index acceleration....