Liquidity traps or Minsky crises: a critical review of the recent U.S. recession and Japan's Heisei recession in the 1990s
This paper reviews the Japanese growth recession from 1991 to 2001 and the recent U.S. financial crisis to determine the relevancy of the "liquidity trap" hypothesis (due originally to Keynes updated by Krugman) and a Minsky crisis hypothesis. To evaluate the Minsky hypothesis, we use the same data series that he used in his 1986 analysis and follow in his footsteps. These data clearly show increasing financial stress and fragility by 2005 in the United States. We find that elements of both hypotheses are useful in describing economic conditions and thus guiding policy choices. Current Fed policy in vastly expanding its balance sheet to support the financial sector is just the sort of policy that Minsky might have advocated.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 32 (2010)
Issue (Month): 4 (July)
|Contact details of provider:|| Web page: http://mesharpe.metapress.com/link.asp?target=journal&id=109348|
When requesting a correction, please mention this item's handle: RePEc:mes:postke:v:32:y:2010:i:4:p:571-590. 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.