Discussion and Q&A: Instability in Financial Markets 5/5

The video explores the role of interconnectivity and size in financial systems, discussing models that assess these factors. It highlights the importance of understanding financial instability through the lens of debt, imperfect knowledge, and policy implications. Minsky's theory of financial fragility is examined, emphasizing the need to manage debt levels. The discussion concludes with a debate on regulatory measures, their challenges, and potential solutions to prevent financial crises.

What role does interconnectivity play in the financial system according to the text?

How does the size of banks relate to their interconnectedness and potential danger?

What empirical assessments are suggested regarding interconnectivity and size?

What are the implications of breaking up big conglomerates in the context of financial stability?

What are the suggested policy implications for managing financial instability?

What does the text suggest about the role of government in managing asset price swings?

Discuss the relationship between debt levels and financial stability as mentioned in the text.

What lessons can be learned from historical financial crises regarding debt and stability?

How does imperfect knowledge affect credit growth and financial crises?

In what ways can regulatory measures impact the likelihood of financial crises?