Peer-Reviewed Journal Details
Mandatory Fields
Bhaduri, Amit; Raghavendra, Srinivas; Guttal, Vishwesha
2015
January
Metroeconomica
On the systemic fragility of finance led growth
Published
()
Optional Fields
66
1
158
186
The paper sets up a model of economic crisis by investigating the role played by movement in asset price as a driver of the dynamic interaction between the real and the financial sectors. Such movement influences income determination in the real economy in the short period through aggregate demand leading to the emergence of two macroeconomic regimes. A short period flow model, underpinned by the stock flow consistent accounting framework, is developed to formalize the dynamics of interaction between real and financial sectors mediated by movement in asset price, generates bistability, abrupt crashes, and systemic fragility in the macroeconomic regimes.
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