European Journal of Economics and Economic Policies: Intervention

Confidence and financial crisis in a post-Keynesian stock flow consistent model

Edwin Le Heron

Abstract

The paper aims at showing that one of the main channels by which the US 2007 financial crisis became a real and global economic crisis is the ›confidence channel‹, i.e. that the financial crisis affected firms, banks and households' expectations and confidence, thus leading to what they were fearing. And I propose to model expectations and the state of confidence of private agents to use the indexes calculated by national statistical services from monthly polls.

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