TEL  Vol.4 No.1 , February 2014
Disequilibrium Pricing Theory—Bubbles and Recessions
Abstract: How can one track a financial bubble as a likely precursor to bank panics and subsequent recessions? We model the Minsky-Keynes depiction of a financial market—by extending the “equilibrium-price” model to a “disequilibrium-price” model, through adding a third dimension of time. In this way, we use a topological graphic approach to see how the models from the two schools of economics, exogenous and endogenous, relate to each other as complementary models of production and financial sub-systems. These economic models are partial models in an economy—not a model of the whole economy. However, such partial models can be used to anticipate financial bubbles—hence bank runs and recessions due to bank runs—which typically follow.
Cite this paper: F. Betz, "Disequilibrium Pricing Theory—Bubbles and Recessions," Theoretical Economics Letters, Vol. 4 No. 1, 2014, pp. 60-67. doi: 10.4236/tel.2014.41009.

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