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Financial instability and functional finance : a Lerner-Minsky perspective

Listed author(s):
  • Faruk Ülgen

    ()

    (CREG - Centre de recherche en économie de Grenoble - Grenoble 2 UPMF - Université Pierre Mendès France)

The 2007/08 financial crisis results in two major problems that issue difficult challenges for the economic theory and policy. The first challenge is the rise of unemployment notwithstanding growing imbalances of budget deficits. The second is the monetary and financial instability threatening the permanence of economic development. In response to these two challenges a reappraisal of the functional finance approach of Abba Lerner and of the financial instability hypothesis of Hyman Minsky seems to be a relevant way of reconsidering the pitfalls of the working of capitalist economies. Consistency of public interventions in face of growing unemployment and atonic economic activity rests on the new principles that should guide financial system's reform in order to deal with the malfunctioning of liberalized markets.

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Paper provided by HAL in its series Post-Print with number halshs-00843754.

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Date of creation: 18 Oct 2012
Publication status: Published in 24th annual conference of the European association for evolutionary political economy "Economic policy in times of crisis", Cracow university of economics, Oct 2012, Cracovie, Poland
Handle: RePEc:hal:journl:halshs-00843754
Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00843754
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  1. L. Randall Wray, 2009. "An Alternative View of Finance, Saving, Deficits, and Liquidity," International Journal of Political Economy, M.E. Sharpe, Inc., vol. 38(4), pages 25-43, December.
  2. Mathew Forstater, 1999. "Functional Finance and Full Employment: Lessons from Lerner for Today," Economics Working Paper Archive wp_272, Levy Economics Institute.
  3. Peter Hans Matthews & David Colander, 2004. "Integrating Sound Finance with Functional Finance," Middlebury College Working Paper Series 0413, Middlebury College, Department of Economics.
  4. Mathew Forstater, 1999. "Functional Finance and Full Employment: Lessons from Lerner for Today," Macroeconomics 9908002, EconWPA.
  5. Giuseppe Mastromatteo, 2011. "The Debate on the Crisis: Recent Reappraisals of the Concept of Functional Finance," DISCE - Quaderni dell'Istituto di Economia e Finanza ief0105, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
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