The Current Financial Crisis, Monetary Policy, and Minsky's Structural Instability Hypothesis
The object of this work is to evaluate the monetary policy issues that arose during the financial crisis of 2007-8 according to Minsky's thought. It is argued that Minsky's idea of structural instability may fit the policy problems linked to the crisis. In particular, Minsky's contribution to the theory of central banking is used to evaluate the conduct of the Federal Reserve during the crisis. Minsky's reading of the roles of the central bank in the presence of sophisticated markets and securitization is helpful in understanding both the failure of the Federal Reserve in preventing the crisis and the relative success in mitigating the effects. This apparent success notwithstanding, the paper warns that economic policy, to promote stability, must enlarge the stability field of the system by changing the type of institutions operating there and their business habits.
Volume (Year): 39 (2010)
Issue (Month): 2 (July)
|Contact details of provider:|| Web page: http://mesharpe.metapress.com/link.asp?target=journal&id=110909|
When requesting a correction, please mention this item's handle: RePEc:mes:ijpoec:v:39:y:2010:i:2:p:41-57. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Chris Nguyen)
If references are entirely missing, you can add them using this form.