Financially Unstable Households

摘要

One of Hyman Minsky's most important contributions is the Financial Instability Hypothesis (FIH), which explains why capitalist economies experience periods of optimism (booms) and pessimism (bust). At the beginning of a cycle, businesses take on more debt, but they are conservative, and the principal is easily paid back (a hedge position). As optimism grows, so does risk-taking and businesses take on more debt. At some point they can only afford to pay interest on that debt (speculative position). In the most extreme case, businesses take on so much debt that they can neither pay the principal nor make interest payments (Ponzi position). Minsky wrote about financial instability (e.g., 1975, 1982) before U.S. households had taken on large levels of debt. Minsky focused on businesses since they were the debt drivers. Today household debt is at record levels, so it makes sense to understand how financially unstable U.S. households are and what this means for the economy. We begin the article by arguing that Minsky's categories should be applied to households; then we operationalize them using the Federal Reserve's Survey of Consumer Finances. This enables us to measure changes in household financial instability using a Minsky-inspired framework and draw some conclusions.