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| Title: | | A contribution to the theory of financial fragility and crisis  |
| Authors: | | Bhaduri, Amit |
| Issue Date: | | 2010 |
| Series/Report no.: | | Working paper, Levy Economics Institute 593 |
| Abstract: | | The paper examines three aspects of a financial crisis of domestic origin. The first section studies the evolution of a debt-financed consumption boom supported by rising asset prices, leading to a credit crunch and fluctuations in the real economy, and, ultimately, to debt deflation. The next section extends the analysis to trace gradual evolution toward Ponzi finance and its consequences. The final section explains the link between the financial and the real sector of the economy, pointing to an inherent liquidity problem. The paper concludes with comments on the interactions between the three aspects. |
| Subjects: | | capital gains consumer debt debt-driven fluctuations effective demand financial fragility liquidity preference |
| JEL: | | D84 E12 E21 E32 E41 E44 E51 G12 G18 G24 N22 |
| Document Type: | | Working Paper |
| Appears in Collections: | | Working Papers, Levy Economics Institute of Bard College
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