Causes of Financial Instability: Don’t Forget Finance

Bezemer, Dirk

doi:10.2139/ssrn.1808020

Cited by 17 publications

(8 citation statements)

References 22 publications

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“…They show how in such a model, power‐law dynamics emerge for several variables, such as the size of the firm and income distribution. In the same year, another early call to combine ABM with the SFC approach is found in Bezemer (). He shows that a careful modelling of an economy's financial structure can give rise to non‐linear behaviours and endogenous crises, unlike the DSGE models.…”

Section: Sfc and Agent‐based Modellingmentioning

confidence: 99%

Stock‐flow Consistent Macroeconomic Models: A Survey

Nikiforos

Zezza

2017

Journal of Economic Surveys

112

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in May 2017The Levy Economics Institute Working Paper Collection presents research in progress by Levy Institute scholars and conference participants. The purpose of the series is to disseminate ideas to and elicit comments from academics and professionals.Levy Economics Institute of Bard College, founded in 1986, is a nonprofit, nonpartisan, independently funded research organization devoted to public service. Through scholarship and economic research it generates viable, effective public policy responses to important economic problems that profoundly affect the quality of life in the United States and abroad. extended to address issues such as financialization and income distribution. We next discuss the implications of the approach for models of open economies and compare the methodologies adopted in developing SFC empirical models for whole countries. We review the contributions where the SFC approach is being adopted as the macroeconomic closure of microeconomic agent-based models, and how the SFC approach is at the core of new research in ecological macroeconomics. Finally, we discuss the appropriateness of the name "stock-flow consistent" for the class of models we survey.

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Section: Sfc and Agent‐based Modellingmentioning

confidence: 99%

Stock‐flow Consistent Macroeconomic Models: A Survey

Nikiforos

Zezza

2017

Journal of Economic Surveys

112

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“…The financial system comprises a set of institutions, markets and instruments designed to channel the economic savings to deficit agents, transferring resources to projects with better mix profitability -risk. For some authors the current economic situation, characterized by a financial crisis in terms of financial disturbances, has led to unstable economic situation (Bezemer, 2011;Martin-García and Ballesté-Morillas, 2012). In this environment, financing has become a scarce commodity (Carreira and Silva, 2010).…”

Section: Introductionmentioning

confidence: 99%

Entrepreneurship and Financing: Empirical Characterization of New Catalan Companies and the Influence of Belonging to a Business Group

CASTELLÀ-ESCOLÀ¹,

Torrent‐Sellens²,

CURÓS-VILÀ³

2015

JSBED

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This paper studies behavior of funders' agents in Catalonia, with the aim of determine if there are differences between traditional (bank) or alternative (venture) capital in financing entrepreneurship's projects, considering the relationship with business group and other carhacteristics. The study is based on quantitative analysis of financing in 300 new Catalan companies created in Catalonia from 2006 to 2011. The results indicate a tendency in firms belonging to business groups to have more funding from banks and greater perception of public aids. There are also differences regarding export activity and complexity, which are higher in companies belonging to business groups.

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“…However, these models are based on the assumptions of efficient financial markets and rational expectations and can only explain minor fluctuations around a predetermined state of equilibrium, but not the fact that externalities arising from synchronised behavior or interbank contagion may catapult minor fluctuations into widespread market failure (Thurner, 2011). The most promising approach to examine systemic financial risk and policies to deal with it are agent-based models (ABM), which use a bottom-up approach of learning adaptive heterogeneous agents (Bezemer, 2011;Bouchaud, 2008;Economist, 2010;Farmer and Foley, 2009;Lux and Westerhoff, 2009;Thurner, 2011). In contrast to general equilibrium theory, they do not require a steady-state, but model interactions between heterogeneous agents through behavioral rules.…”

Section: Introductionmentioning

confidence: 99%

Macroprudential Banking Regulation: Does One Size Fit All?

Neuberger

Rissi

2012

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractThe macroprudential regulatory framework of Basel III imposes the same capital and liquidity requirements on all banks around the world to ensure global competitiveness of banks. Using an agent-based model of the financial system, we find that this is not a robust framework to achieve (inter)national financial stability, because efficient regulation has to embrace the economic structure and behaviour of financial market participants, which differ from country to country. Market-based financial systems do not profit from capital and liquidity regulations, but from a ban on proprietary trading (Volcker rule). In homogeneous or bank-based financial systems, the most effective regulatory policy to ensure financial stability depends on the stability measure used.Irrespective of financial system architecture, direct restrictions of banks' investment portfolios are more effective than indirect restrictions through capital, leverage and liquidity regulations. Applying the model to the Swiss financial system, we find that excessively increasing regulatory complexity has destabilizing effects. These results highlight for the first time a necessary change in regulatory paradigm to ensure effectiveness and efficiency of financial regulations with regards to fostering financial system resilience.JEL classification: C63, G01, G11, G21, G28

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Causes of Financial Instability: Don’t Forget Finance

Cited by 17 publications

References 22 publications

Stock‐flow Consistent Macroeconomic Models: A Survey

Stock‐flow Consistent Macroeconomic Models: A Survey

Entrepreneurship and Financing: Empirical Characterization of New Catalan Companies and the Influence of Belonging to a Business Group

Macroprudential Banking Regulation: Does One Size Fit All?

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