Forecasting a Cyclical Downturn (Recession)
in the US Economy Using a Mathematical Model
of Hyman Minsky’s Theory of Financial Instability
Foreign Member of the RAS A. A. Akaeva,* and Academician of the RAS V. A. Sadovnichiib,**
a Institute of Complex System Mathematical Research, Lomonosov Moscow State University, Moscow, 119992 Russia
b Faculty of Mechanics and Mathematics, Lomonosov Moscow State University, Moscow, 119991 Russia
Correspondence to: *e-mail: askarakaev@mail.ru
Correspondence to: **e-mail: info@rector.msu.ru
Received 18 June, 2020
Abstract—By using the US economy as an example, the paper shows how the COVID-19 pandemic has changed its short-term dynamics, causing a deep crisis recession in 2020 rather than the expected short-term and shallow recession in 2022 caused by the inflation of the financial bubble during the credit expansion that followed the financial and economic crisis of 2008–2009. To predict the latter scenario, which is natural for the US economy, the authors first developed a mathematical model based on Hyman Minsky’s theory of financial instability, which can serve to manage the processes of credit expansion and contraction in an unstable economy.
Keywords: economic dynamics, speculative growth lending, Minsky’s theory of financial instability, management of credit expansion and contraction, mathematical model for forecasting a cyclical downturn (recession) in an unstable economy
DOI: 10.1134/S1064562420050245