IDEAS home Printed from https://ideas.repec.org/a/mes/jeciss/v58y2024i1p85-111.html
   My bibliography  Save this article

A Critical Analysis of the Financial Frictions Approach in a Minskyan Perspective

Author

Listed:
  • Giancarlo Bertocco
  • Andrea Kalajzić

Abstract

The concept of financial frictions is at the core of the Financial Frictions Approach (FFA) which underlines that to explain the financial crisis of 2007–2008 it is sufficient to add the financial system to the New Keynesian Dynamic Stochastic General Equilibrium (NK-DSGE) model. Many economists have cited Hyman Minsky among those who “emphasized the importance of financial frictions.” The aim of this work is: 1) to show that Minsky cannot be considered the precursor of the FFA and that FFA does not allow for a solid explanation of financial crises; and 2) to present a sound explanation of the financial instability affecting capitalist economies based on two teachings characterizing Minsky’s work. The first consists in Minsky’s interpretation of John Maynard Keynes’s General Theory, which recovers the revolutionary elements of Keynes’s thought neglected by the Neoclassical Synthesis. The second teaching consists in underlining the need to integrate Keynes’s and Joseph Schumpeter’s theoretical frameworks.

Suggested Citation

  • Giancarlo Bertocco & Andrea Kalajzić, 2024. "A Critical Analysis of the Financial Frictions Approach in a Minskyan Perspective," Journal of Economic Issues, Taylor & Francis Journals, vol. 58(1), pages 85-111, January.
    • Handle: RePEc:mes:jeciss:v:58:y:2024:i:1:p:85-111
    DOI: 10.1080/00213624.2024.2307791
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/00213624.2024.2307791
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/00213624.2024.2307791?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mes:jeciss:v:58:y:2024:i:1:p:85-111. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/MJEI20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.