Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/57003
Authors: 
Tymoigne, Éric
Year of Publication: 
2011
Series/Report no.: 
Working paper, Levy Economics Institute 654
Abstract: 
With the Great Recession and the regulatory reform that followed, the search for reliable means to capture systemic risk and to detect macrofinancial problems has become a central concern. In the United States, this concern has been institutionalized through the Financial Stability Oversight Council, which has been put in charge of detecting threats to the financial stability of the nation. Based on Hyman Minsky's financial instability hypothesis, the paper develops macroeconomic indexes for three major economic sectors. The index provides a means to detect the speed with which financial fragility accrues, and its duration; and serves as a complement to the microprudential policies of regulators and supervisors. The paper notably shows, notably, that periods of economic stability during which default rates are low, profitability is high, and net worth is accumulating are fertile grounds for the growth of financial fragility.
Subjects: 
financial fragility
financial regulation
financial crises
macroprudential risk
debt-deflation process
Ponzi Finance
JEL: 
E32
G01
G18
G28
G38
Document Type: 
Working Paper

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