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This page lists and links to my aca­d­e­mic papers. If you would like to sup­port my research, please click on this link: Research Fund­ing.

Research Financial Instability and Endogenous Money.

A mon­e­tary Min­sky model of the Great Mod­er­a­tion & the Great Reces­sion. This paper is forth­com­ing in the Jour­nal of Eco­nomic Behav­ior and Orga­ni­za­tion. The sim­u­la­tions there are  slightly mis­lead­ing since the ini­tial con­di­tions con­tained an incon­sis­tency; these have since been cor­rected to yield the same long term out­come but far less volatile ini­tial fluc­tu­a­tions. I’ll pub­lish the paper with these revised con­di­tions shortly

A model of endoge­nous credit cre­ation and a credit crunch. This paper is very tech­ni­cal and out­lines my analy­sis of a credit crunch, which shows that if that was the only prob­lem we faced, a gov­ern­ment res­cue could work, and con­trary to stan­dard mon­e­tary the­ory (a.k.a. the “money mul­ti­plier” model) it would be much bet­ter to give the gov­ern­ment money to debtors than to the banks. It also out­lines my pre­lim­i­nary mul­ti­sec­toral mon­e­tary model of pro­duc­tion. This paper was pro­duced with the finan­cial assis­tance of theP­aul Wool­ley Cen­tre for Cap­i­tal Mar­ket Dys­func­tion­al­ity at the Uni­ver­sity of Tech­nol­ogy, Syd­ney.

House­hold Debt—the final stage in an arti­fi­cially extended Ponzi Bub­ble, Aus­tralian Eco­nomic Review, Vol. 42 No. 3 Sep­tem­ber 2009, pp. 347–57. This paper shows that the growth in house­hold debt was not an equi­lib­rium response to falling inter­est rates, but a Ponzi spec­u­la­tive bub­ble whose burst­ing is caus­ing a seri­ous reces­sion. I present a model of Minsky’s “Finan­cial Insta­bil­ity Hypoth­e­sis” that includes Ponzi finance as well as pro­duc­tive invest­ment; the model gen­er­ates a Depres­sion when debt accu­mu­lated for spec­u­la­tive pur­poses over­whelms the pro­duc­tive capac­ity of the econ­omy.

The Dynam­ics of the Mon­e­tary Cir­cuit, in The Polit­i­cal Econ­omy Of Mon­e­tary Cir­cuits: Tra­di­tion And Change In Post-Key­ne­sian Eco­nom­ics, edited by Jean-François Pon­sot and Ser­gio Rossi (Pal­grave, 2009, pp. 161–187). This is a rea­son­ably acces­si­ble expla­na­tion of the tech­nique I use to derive dynamic mod­els of finance, and advo­cacy of con­tin­u­ous time meth­ods over the dis­crete time approach that dom­i­nates Post Key­ne­sian eco­nom­ics today.

Bail­ing out the Titanic with a Thim­bleEco­nomic Analy­sis and Pol­icy, Vol 39 Issue 1, pp. 3–24. Unlike most ref­er­eed aca­d­e­mic jour­nals, this one is freely acces­si­ble online. In this paper I explain why I don’t expect the bailouts to work, I present a model of a credit crunch in a pure credit econ­omy where the credit crunch alone causes a Great Depres­sion.

My PhD the­sis Eco­nomic Growth and Finan­cial Insta­bil­ity (UNSW, 1997).

Using Math­cad in Eco­nomic Analy­sis

This arti­cle, on Hearne Sci­en­tific Software’s web­site, explains my use of Math­cad for both data analy­sis and mod­el­ling.

The Non­lin­ear Dynam­ics of Debt Defla­tion. This tech­ni­cal paper gives a math­e­mat­i­cal model of Minsky’s Finan­cial Insta­bil­ity Hypoth­e­sis. It includes an extended model with a gov­ern­ment sec­tor that can con­tain the process of pri­vate debt accu­mu­la­tion, and a pre­lim­i­nary attempt to model price dynam­ics

The Non­lin­ear Eco­nom­ics of Debt Defla­tion. This tech­ni­cal paper also has a gov­ern­ment sec­tor exten­sion to the basic non-mon­e­tary Min­sky model from my 1995 paper, and shows that under some cir­cum­stances there is a bifur­ca­tion in gov­ern­ment debt when sta­bi­liz­ing an unsta­ble econ­omy: in some cir­cum­stances, both pri­vate debt and gov­ern­ment debt sta­bi­lize as a per­cent­age of GDP, but in oth­ers run­away gov­ern­ment debt is needed to sta­bi­lize pri­vate debt.

The non-con­ser­va­tion of money

The process of endoge­nous money cre­ation

The “Finan­cial Insta­bil­ity Hypoth­e­sis”

Expert Opin­ion on Ponzi Loans

Other Topics

I’ll grad­u­ally link all my aca­d­e­mic papers here, since jour­nals now seem com­fort­able about aca­d­e­mics link­ing their papers on their own web­sites.


Wor­ry­ing trends in econo­physics. Mauro Gal­le­gati, Steve Keen, Thomas Lux, Paul Ormerod, (2006). “Wor­ry­ing trends in econo­physics”, Phys­ica A 370, pp. 1–6.


A Marx for Post Key­ne­sians; unpub­lished

The Mis­in­ter­pre­ta­tion of Marx’s The­ory of Value; Jour­nal of the His­tory of Eco­nomic Thought, 15 (2), Fall, 282–300

Use-value, exchange-value, and the demise of Marx’s Labour The­ory of Value; Jour­nal of the His­tory of Eco­nomic Thought, 15 (1), Spring, 107–121

Use, Value and Exchange: The Mis­in­ter­pre­ta­tion of Marx; my Mas­ters the­sis on Marx, UNSW 1990; unpub­lished

Theory of the Firm

The con­ven­tional the­ory of com­pe­ti­tion is non­sense. I explain why in Chap­ter 4 of Debunk­ing Eco­nom­ics, “Size Does Mat­ter”. A more tech­ni­cal expla­na­tion is given in this paper:

Steve Keen (2004). “Dereg­u­la­tor: Judg­ment Day for Micro­eco­nom­ics”, Util­i­ties Pol­icy, 12: 109 –125

This only cov­ers the Mar­shal­lian the­ory how­ever. More detailed cri­tiques that are rel­e­vant to the Cournot model as well are pub­lished here:

Steve Keen and Rus­sell Stan­dish, (2006). “Profit Max­i­miza­tion, Indus­try Struc­ture, and Com­pe­ti­tion: A cri­tique of neo­clas­si­cal the­ory”, Phys­ica A 370: 81–85

Steve Keen and Rus­sell Stan­dish, (2010). “Debunk­ing the the­ory of the firm—a chronol­ogy”, real-world eco­nom­ics review, issue no. 53, 26 June 2010, pp. 56–94,

This paper gives a com­plete chrono­log­i­cally laid out cov­er­age of our cri­tique, from its begin­nings when writ­ing Debunk­ing Eco­nom­ics to a demon­stra­tion that the Cournot-Nash equi­lib­rium is meta-unsta­ble.

Say’s Law

Nudge Nudge, Wink Wink Say No More!” in Steve Kates (ed.), Two Hun­dred Years of Say’s Law, Edward Elgar, Alder­shot, pp. 199–209.

Transna­tional cor­po­ra­tions and aggre­gate demand

The relo­ca­tion of pro­duc­tion and aggre­gate demand (Tech­ni­cal Appen­dix)

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  • Pro­fes­sor Keen,
    I am won­der­ing if the exis­tence of endoge­nous money argues for the via­bil­ity of more local­ized credit cre­ation i.e. decen­tral­iz­ing finance from money cen­ter banks, and even mul­ti­ple com­ple­men­tary cur­ren­cies, than has been thought pos­si­ble by tra­di­tional eco­nom­ics?
    I have read your Keynes’s Revolv­ing Fund of Finance paper and perused other papers and pre­sen­ta­tions at your site.
    I am an applied econ­o­mist liv­ing on the West Coast of the USA (Ash­land, OR). I’ve been involved in regional eco­nomic devel­op­ment enter­prises includ­ing devel­op­ing inno­v­a­tive approaches to financ­ing new enter­prise. While I have a BA in eco­nom­ics (UCSD, ’79), I did not know about endoge­nous money, mon­e­tary the­ory of pro­duc­tion nor of the ‘power’ of trade credit. Your papers and those of Sheila Dow, among oth­ers, have enlight­ened me.

    I am attach­ing a pro­posed leg­is­la­tion that I’m devel­op­ing with a group in the elder­care indus­try (who are fac­ing huge fis­cal prob­lems). It involves a mix­ture of trade finance with “inter­est free” national money. Our design here is only very con­cep­tual, but I am won­der­ing if you think it has merit.

    Tor­rey Byles

  • Hi Tor­rey,

    It cer­tainly argues for localised money sys­tems when there’s been a debt-induced break­down like the one we’re cur­rently in–ideas like Gisell’s had a pos­i­tive impact when they were tried in the Great Depres­sion.

    Over the longer term though, com­pet­ing cur­ren­cies gets us back to the Free Bank­ing sys­tem of the 19th cen­tury, and that largely ended in tears.

    I didn’t get the attach­ment BTW. Send it to me at debunk­ing at gmail dot com.

  • Aran­fan

    On the Free Bank­ing period end­ing in tears, how much of that was because of the gold reserve require­ments? What should back the money was a huge polit­i­cal issue for a long time, and many peo­ple thought that a lot of the pain was caused by the specie require­ments lim­it­ing the money sup­ply.

  • Only part of it Aran­fan,

    Most of the aca­d­e­mic lit­er­a­ture tar­gets “wild­cat” bank­ing as the cause for most of the fail­ures, though the New York sys­tem may have had the prob­lems you iden­tify here.

  • ignace

    Hello mr Keen,
    some days ago(23june), I saw your inter­view at Max Keiser (great inter­view). In this inter­view you men­tioned as side com­ment about eng­land 1920, where intro­duc­ing gold stan­dard cre­at­ing deval­u­a­tion and so the wages had to be reduced.
    My ques­tion is, what kind of books / papers do you know (rec­om­mend) , where these kind of his­toric events are explained in a proper way? So not with a neo-liberal/classical doc­trine expla­na­tion, but real­is­tic.

    A related ques­tion to this: in your old blog, I recall you had a sec­tion about books, and I think there I read about the Min­sky book. (I also found book of kindle­berger about manias, pan­cis and crashes.)
    I also see you have a lec­ture about the evo­lu­tion of eco­nom­i­cal thoughts.
    So did you ever con­sider about explain­ing his­tor­i­cal events with proper ecom­i­cal the­ory in a lec­ture? (like the 1920 reces­sion, the great depres­sion, the end of the gold backed dol­lar (Nixon) ‚etc)


    Best Regards

  • Prof Keen,

    I would be inter­ested to hear whether your saw Gold as a destruc­tive defla­tion­ary force, and Gold as the best nat­ural reg­u­la­tor to pre­vent a dis­pro­por­tion­ate growth of debt to GDP. Given that the 19th cen­tury saw very mild infla­tion com­pared to the 20th.


  • Prof Keen,

    I would be inter­ested to hear whether your saw Gold as a destruc­tive defla­tion­ary force, and Gold as the best nat­ural reg­u­la­tor to pre­vent a dis­pro­por­tion­ate growth of debt to GDP. Given that the 19th cen­tury saw very mild price infla­tion com­pared to the 20th.


  • The 19th cen­tury trade cycle was quite vio­lent Arvind. Say­ing it had mild price infla­tion is a bit like say­ing that a coun­try with 1 mil­lion­aire and 9 pau­pers has an aver­age income of $100,000 p.a. The swings from infla­tion to defla­tion and the crises that went with them were a major fac­tor in the rise of social­ism. Also, as I argued in the last lec­ture I posted, money is fun­da­men­tally a non-com­mod­ity, whereas try­ing to use gold as money is an attempt to turn it into a com­mod­ity. There are numer­ous rea­sons why I see that as a ret­ro­grade step, and focus­ing on the wrong prob­lem. Stop­ping the finance sec­tor from financ­ing Ponzi Schemes is to me the main game, and swap­ping to gold rather than credit money is orthog­o­nal to that issue.

  • Phil Pope

    Hi Steve,

    I came across your work because I was think­ing about using dif­fer­en­tial equa­tions to analyse eco­nomic sys­tems much as they are used in chem­istry to look at reac­tion rates in com­plex reac­tions with mul­ti­ple inter­me­di­ary prod­ucts. thanks to google “eco­nom­ics dif­fer­en­tial equa­tion equi­lib­rium” quickly directed me to the exist­ing work in this area includ­ing your own.

    I’ve been read­ing through your paper, The Dynam­ics of the Mon­e­tary Cir­cuit, linked above. I under­stand the over­all method and am inter­ested in work­ing with the QED soft­ware but I can­not derive the sym­bolic solu­tion you give on p169 to the dif­fer­en­tial equa­tions on p168. I think I have solved them with a quite dif­fer­ent answer:

    (please read w as omega, and b as beta in your paper)

    only the inter­est on the firm loan is ser­viced so Fl=L

    if wages are defined as (1-s).S.Fd

    then profit = s.S.Fd

    this can be sub­sti­tuted for the terms b.Bd+w.Wd-(1-s).S.Fd in the fourth dif­fer­en­tial equa­tion giv­ing:


    at equi­lib­rium


    sub­sti­tut­ing into the third and sec­ond dif­fer­en­tial equa­tions:



    for pos­i­tive account bal­ances s.w>rd

    wages can then be writ­ten as:


    profit as:


    includ­ing inter­est work­ers income = w.Wd

    and bankers income = b.Bd

    cap­i­tal­ist income is zero i.e. profit + rd.Fd=rl.Fl. as there is no term for cap­i­tal­ists expen­di­ture in this sim­pli­fied model their net earn­ings must be zero for Fd to have an equi­lib­rium value.

    If I am cor­rect this nei­ther negates the method nor inval­i­dates the more com­plex dynamic mod­els (for which sym­bolic solu­tions don’t seem pos­si­ble any­way) but the con­clu­sion that cap­i­tal­ists earn a pos­i­tive income would have to derived from a more com­plex model.

    Phil Pope

  • Hi Phil, sorry for the slow reply–meant to reply and let it slip a bit.

    Down­load this paper and check the alge­bra:–31

    The sym­bolic cal­cu­la­tions there were done in 2 sym­bolic math­e­mat­ics pro­grams (Math­cad and Math­e­mat­ica) and checked by hand as well. They’re accu­rate, and you can there­fore derive pos­i­tive prof­its from this sim­ple model.

  • Zachary Kurz

    where are updated blog posts posted? Thanks

  • Phil Pope

    thanks for tak­ing the time to reply steve. tried again and if Fd+Bd+Wd=L is used rather than sub­sti­tut­ing s.S.Fd for the profit terms then the expres­sions you give come out. sorry to be picky but I like to under­stand the fun­da­men­tals of mod­els. just fin­ish­ing Debunk­ing Eco­nom­ics 2 and very impressed. is there any user guide or faq for the QED pro­gramme?

  • No problem–glad you sorted it out.

    There isn’t a guide to QED unfor­tu­nately, but I’m record­ing a talk tonight (in Argentina) where I’ll use the pro­gram live. I will prob­a­bly upload that in a cou­ple of days (when I have a decent con­nec­tion) so that will give you a guide as to how to use it.

    The first (0.1) ver­sion of Min­sky is almost ready; just a cou­ple of dis­play bugs to be fixed. It is def­i­nitely a pro­to­type, and doesn’t have the same visual feel that QED has right now, but it will offer a supe­rior inte­gra­tion of tab­u­lar and flow­chart mod­el­ling.

  • Richard Tomaso­vic

    Steve — I am an admirer of your work. I am cur­rently look­ing through all your book & papers as I feel you have some­thing very impor­tant to say. One ques­tion that both­ered me for a while was how to esti­mate how much of con­sump­tion over time was financed by the ever increas­ing amount of debt. I saw that in your paper “House­hold Debt—the final stage in an arti­fi­cially extended Ponzi Bub­ble” you have this infor­ma­tion in Fig­ure 5.
    Could you please tell me what exactly this is (con­sumer debt, total debt, etc..) and how you derived it?

  • Hi Richard,

    It’s sim­ply the change in aggre­gate pri­vate debt (house­hold plus business–from RBA Sheet D02) over a year, divided by the sum of GDP plus the change in pri­vate debt over the year:

    (change in debt)/(GDP plus change in debt)

    Hope that helps!

  • RichardT

    Thanks Steve.
    Shouldn’t the ‘impact’ on GDP (or AD) of expand­ing debt be to some extent also a func­tion of the veloc­ity of money? I won­der, am I ask­ing a dif­fer­ent ques­tion than the one you are answer­ing in your paper…?

    I was con­sid­er­ing a thought exper­i­ment using 2 sce­nar­ios:
    1) No change in debt results in a GDP level L1
    2) Increase in debt by X results in GDP level L2.

    How much larger is L2 than L1 given X?

    While I rec­og­nize that there are lots of cross depen­den­cies, I would think that, due to the veloc­ity of money, an increase in debt would increase GDP by some­thing like veloc­ity x chng in debt.

    If Mon­ey­Stock x veloc­ity = GDP, if I increase the money stock through the cre­ation of debt by 1bn, wouldn’t GDP increase by an accord­ing mul­ti­ple?

    A cal­cu­la­tion along these lines would allow us to deter­mine what level of aggre­gate demand we’d be faced with if there had been no growth in debt, and I believe the result would be higher than what you call “debt con­tri­bu­tion”.

    I hope this makes sense and I would appre­ci­ate your thoughts on the mat­ter.

  • Hi Richard,

    The dif­fer­ence between a change in veloc­ity and accel­er­a­tion is that the for­mer doesn’t change the amount of money in cir­cu­la­tion, while the lat­ter does. The for­mer can there­fore cause a small increase in invest­ment (or con­sump­tion), but noth­ing on the scale of the lat­ter. I’ve sim­u­lated this in my sim­ple credit mod­els, and I think the Rov­ing Cav­a­liers post gives an exam­ple of this. It’s cer­tainly in some of my Hon­ours Polit­i­cal Econ­omy lec­tures, which are going up on the web shortly.

  • RichardT

    Steve, I read the Rov­ing Cav­a­lier post and agree with your com­ment, but I believe the point I was try­ing to make was a dif­fer­ent one:

    You call (change in debt)/(GDP + change in debt) the “debt con­tri­bu­tion”.

    What I call “debt con­tri­bu­tion” (and I won­der if my ter­mi­nol­ogy is inac­cu­rate) is how much GDP expands if debt expands by X. I was won­der­ing if the “debt con­tri­bu­tion” to AD is higher because its effect is mul­ti­plied by the veloc­ity of money. Hence I would have expected some­thing like (veloc­ity x change in debt) in the numer­a­tor.

    I hope I am not argu­ing about ter­mi­nol­ogy and I am quite inclined to believe that you are right, but I am gen­uinely con­fused why a for­mula that mea­sures the impact of addi­tional debt on growth has no veloc­ity in it.
    Thanks again for tak­ing the time to dis­cuss that with me.

  • Yes that’s a rea­son­able idea. I am think­ing more on the “where does demand come from?” side how­ever. That is more of a “how does pro­duc­tiv­ity grow?” per­spec­tive.