![]() In line with George Box’s plea for parsimony, this paper presents a more straightforward version of Keen’s model that remains consistent with its fundamental behaviour. However, the model is also over-specified, highly sensitive to initial conditions and therefore more difficult to convey. The model effectively mimics the dynamics of key indicators prior to, during and after the 2007/08 crisis. One such explanation is provided by Steve Keen in his Goodwin-Minsky model. Alternative, mostly Marxian and Keynesian, explanations for the instabilities have been sought within the structure of the economic system itself. They become unstable and can lead to recessions, crises and depressions-phenomena that economists typically look to exogenous forces to explain. ![]() Every now and then, these common economic cycles go off the hinges. Market-capitalism typically goes through cycles of expansion and contraction.
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