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Financial Fragility and Central Bank: Are Minsky’s Crisis and Austrian Business Cycle are Complementary?

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  • François Facchini

    (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)

Abstract

This article explains why Minsky's post-keynesian explanation tells only one side of the crisis' story. Indeed, the financial fragility of markets explains mainly the activity of Central bank i.e. the lender of last resort which increases the moral hazard phenomena and the socialization of risks. The regulated capitalism is, in this perspective, the cause of market instability and financial fragility. Indeed, moral hazard encourages commercial banks to take risks. In that respect, the economic policies implemented to manage the crisis of 2008 are inadequate.

Suggested Citation

  • François Facchini, 2015. "Financial Fragility and Central Bank: Are Minsky’s Crisis and Austrian Business Cycle are Complementary?," Post-Print hal-01349787, HAL.
    • Handle: RePEc:hal:journl:hal-01349787
    DOI: 10.6000/1929-7092.2015.04.21
    Note: View the original document on HAL open archive server: https://hal.science/hal-01349787
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    References listed on IDEAS

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    1. Lawrence H. White, 2015. "Skepticism About Minsky's Financial Instability Hypothesis: A Comment on Flanders," Econ Journal Watch, Econ Journal Watch, vol. 12(1), pages 106-113, January.
    2. Carilli, Anthony M & Dempster, Gregory M, 2001. "Expectations in Austrian Business Cycle Theory: An Application of the Prisoner's Dilemma," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 14(4), pages 319-330, December.
    3. Steve N. Robinson & Derrick P. Nantz, 2009. "Lessons To Be Learned From The Financial Crisis," Journal of Private Enterprise, The Association of Private Enterprise Education, vol. 25(Fall 2009), pages 5-22.
    4. Catherine Mathieu & Henri Sterdyniak, 2009. "La globalisation financière en crise," Revue de l'OFCE, Presses de Sciences-Po, vol. 0(3), pages 13-73.
    5. David Prychitko, 2010. "Competing explanations of the Minsky moment: The financial instability hypothesis in light of Austrian theory," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 23(3), pages 199-221, September.
    6. Olivier Brossard, 1998. "L'instabilité financière selon Minsky : l'incertitude et la liquidité au fondement du cycle ?," Revue Économique, Programme National Persée, vol. 49(2), pages 407-435.
    7. Facchini, François & Melki, Mickaël, 2013. "Efficient government size: France in the 20th century," European Journal of Political Economy, Elsevier, vol. 31(C), pages 1-14.
    8. Facchini, François & Melki, Mickaël, 2013. "Efficient government size: France in the 20th century," European Journal of Political Economy, Elsevier, vol. 31(C), pages 1-14.
    9. repec:hal:spmain:info:hdl:2441/5l6uh8ogmqildh09h84aj549j is not listed on IDEAS
    10. repec:dau:papers:123456789/4777 is not listed on IDEAS
    11. repec:dau:papers:123456789/3735 is not listed on IDEAS
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    Cited by:

    1. Facchini François, 2016. "The Hayek-Keynes Macro Debate Continues," Journal des Economistes et des Etudes Humaines, De Gruyter, vol. 22(1), pages 1-13, July.
    2. Gerasimos T. Soldatos & Erotokritos Varelas, 2023. "Are Banks Too Many? A Theoretical Possibility and a Policy Issue," Journal of Economic Analysis, Anser Press, vol. 2(1), pages 36-52, February.

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