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Central Bankers in the Minsky Moment: How Different Central Banks Have Responded to the Threat of Debt-Deflation

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  • Dimand, Robert W.
  • Koehn, Robert H.

Abstract

The differing responses of the Federal Reserve, Bank of England, and European Central Bank to the credit crunch of 2007-2008 reflects the differing lessons each has drawn from history. Ben Bernanke of the Federal Reserve and Mervyn King of the Bank of England each studied the debt deflation of the 1930s, stressing different aspects of the process, while the ECB is more influenced by the German hyperinflation of the early 1920s.

Suggested Citation

  • Dimand, Robert W. & Koehn, Robert H., 2008. "Central Bankers in the Minsky Moment: How Different Central Banks Have Responded to the Threat of Debt-Deflation," The Journal of Economic Asymmetries, Elsevier, vol. 5(1), pages 139-148.
    • Handle: RePEc:eee:joecas:v:5:y:2008:i:1:p:139-148
    DOI: 10.1016/j.jeca.2008.01.011
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    References listed on IDEAS

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    1. Bernanke, Ben S, 1981. "Bankruptcy, Liquidity, and Recession," American Economic Review, American Economic Association, vol. 71(2), pages 155-159, May.
    2. Bernanke, Ben S, 1983. "Nonmonetary Effects of the Financial Crisis in Propagation of the Great Depression," American Economic Review, American Economic Association, vol. 73(3), pages 257-276, June.
    3. King, Mervyn, 1994. "Debt deflation: Theory and evidence," European Economic Review, Elsevier, vol. 38(3-4), pages 419-445, April.
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    Cited by:

    1. Robert W. Dimand & Robert H. Koehn, 2011. "Those Who Forget the Past are Condemned to Repeat it: Lessons Learned from Past Financial Crises that were Ignored by the Deregulators of the Past 15 Years," Chapters, in: Joëlle Leclaire & Tae-Hee Jo & Jane Knodell (ed.), Heterodox Analysis of Financial Crisis and Reform, chapter 3, Edward Elgar Publishing.
    2. Robert Dimand & Robert Koehn, 2012. "Central Bank Responses to Financial Crises: Lenders of Last Resort in Interesting Times," Chapters, in: Louis-Philippe Rochon & Salewa ‘Yinka Olawoye (ed.), Monetary Policy and Central Banking, chapter 7, Edward Elgar Publishing.

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    More about this item

    Keywords

    E5; N1; B22; Debt deflation; Lender of last resort; Credit crunch;
    All these keywords.

    JEL classification:

    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • N1 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations
    • B22 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Macroeconomics

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