Technical Report Financial Structure and Instability in an Open Economy

Ninomiya, Kenshiro

(No. B-16)  , pp.1 - 22 , 2017-02 , Center for Risk Research (CRR), Shiga University
The subprime loan mortgage crisis has revived scholarly interest in Minsky s nancial instability hypothesis. The related mathematical models present twotypes of Minskian nancial structures, which we identify as the lenders risk type(LR) and the hedge, speculative and Ponzi type (HSP)We construct macrodynamic models in a xed and oating exchange rate sys-tem which considers both the LR and HSP nancial structures. We examinethe e¤ects of international capital mobility and international lenders risks anddemonstrate the signi cance of the LR and HSP nancial structures in the xedand oating exchange rate system. We emphasize the signi cance of stable nan-cial structures in order to stabilize dynamic systems in an open economy.

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