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THE MINSKY MOMENT AS THE REVENGE OF ENTROPY

Published online by Cambridge University Press:  10 April 2019

J. Barkley Rosser Jr.
J. Barkley Rosser Jr.*
Affiliation:
James Madison University
*
Address correspondence to: J. Barkley Rosser, Jr., Department of Economics, James Madison University, MSC 0204, Harrisonburg, VA 22807, USA; e-mail: rosserjb@jmu.edu
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Abstract

Considering macroeconomies as systems subject to stochastic forms of entropic equilibria, we shall consider how deviations driven by positive feedbacks as in a speculative bubble can drive such an economy into an anti-entropic state that can suddenly collapse back into an entropic state, with such a collapse taking the form of a Minsky moment. This can manifest itself as shifts in the boundary between the portion of the income distribution that is best modeled as Boltzmann–Gibbs and that best modeled as a Paretian power law.

Keywords

Minsky MomentSpeculative BubblesIncome DistributionEntropyEconophysics

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