Post Keynesian and structuralist approaches to boom-bust cycles in emerging economies

TY - CHAP

T1 - Post Keynesian and structuralist approaches to boom-bust cycles in emerging economies

AU - Kohler, Karsten

PY - 2021/5/5

Y1 - 2021/5/5

N2 - The chapter reviews and discusses Post Keynesian and structuralist (PK-S) approaches to boom-bust cycles in emerging market economies (EMEs). Business cycles in EMEs are considerably more volatile compared to rich countries and are characterised by procyclical capital flows and exchange rates, strongly countercyclical trade balances, and external crises during recessions. These stylised facts are linked to certain structural features of EMEs, such as openness, external financial vulnerability, currency mismatches, and high exchange-rate pass-through. The chapter assesses the success of PK-S in capturing these structural features and explaining the stylised facts. It concludes that, over time, PK-S models have devoted more attention to exchange rate flexibility and that Minskyan models of finance-driven business cycles are better equipped to capture the experience of EMEs. Future areas for research are empirical calibration and the explicit modelling of macroeconomic policies.

AB - The chapter reviews and discusses Post Keynesian and structuralist (PK-S) approaches to boom-bust cycles in emerging market economies (EMEs). Business cycles in EMEs are considerably more volatile compared to rich countries and are characterised by procyclical capital flows and exchange rates, strongly countercyclical trade balances, and external crises during recessions. These stylised facts are linked to certain structural features of EMEs, such as openness, external financial vulnerability, currency mismatches, and high exchange-rate pass-through. The chapter assesses the success of PK-S in capturing these structural features and explaining the stylised facts. It concludes that, over time, PK-S models have devoted more attention to exchange rate flexibility and that Minskyan models of finance-driven business cycles are better equipped to capture the experience of EMEs. Future areas for research are empirical calibration and the explicit modelling of macroeconomic policies.

UR - https://www.routledge.com/Emerging-Economies-and-the-Global-Financial-System-Post-Keynesian-Analysis/Bonizzi-Kaltenbrunner-Ramos/p/book/9780367111427

UR - https://www.scopus.com/pages/publications/85109237513

U2 - 10.4324/9780429025037-7

DO - 10.4324/9780429025037-7

M3 - Chapter

SN - 9780367111427

SP - 56

EP - 69

BT - Emerging Economies and the Global Financial System

A2 - Bonizzi, Bruno

A2 - Kaltenbrunner, Annina

A2 - Ramos, Raquel A.

PB - Routledge

ER -