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Minsky's Financial Fragility Applied to the Case of Colombia, 1970–2000

By Edgar Pardo | October 17, 2005

Abstract: We apply Minsky's financial instability hypothesis to Colombia between 1970 and 2000. Financial instability was latent during those three decades, increasing in the 1990s with the implementation of structural adjustment reforms. Both domestic financial reforms and the liberalization of balance-of-payments accounts increased the financial fragility of domestic agents. Increased financial vulnerability, along with higher domestic interest rates, accounts for recent economic and financial crises, with the private sector playing an important role.

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Read More: Economy, Finance, Colombia, Americas

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