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Minsky's Financial Fragility Hypothesis: a Missing Macroeconomic Link?

Author

Listed:
  • Lavoie, M.
  • Seccareccia, M.

Abstract

The paper examines an important contribution of Hyman P. Minsky to Post-Keynesian economic analysis: his financial fragility hypothesis. Because of its lack of Keynesian macroeconomic foundation, the authors show how his famous hypothesis is built on a rather faulty theoretical analysis. Moreover, by studying data from Canada and other OECD countries, the paper also seeks to demonstrate why Minsky hypothesis is based on a shaky empirical one.

Suggested Citation

  • Lavoie, M. & Seccareccia, M., 1999. "Minsky's Financial Fragility Hypothesis: a Missing Macroeconomic Link?," Working Papers 9904e, University of Ottawa, Department of Economics.
  • Handle: RePEc:ott:wpaper:9904e
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    Cited by:

    1. Eugenio Caverzasi & Antoine Godin, 2013. "Stock-flow Consistent Modeling through the Ages," Economics Working Paper Archive wp_745, Levy Economics Institute.
    2. Detzer, Daniel & Herr, Hansjörg, 2014. "Theories of financial crises: An overview," IPE Working Papers 32/2014, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    3. Passarella, Marco, 2012. "A simplified stock-flow consistent dynamic model of the systemic financial fragility in the ‘New Capitalism’," Journal of Economic Behavior & Organization, Elsevier, vol. 83(3), pages 570-582.
    4. Eric Tymoigne, 2006. "The Minskyan System, Part II: Dynamics of the Minskyan Analysis and the Financial Fragility Hypothesis," Economics Working Paper Archive wp_453, Levy Economics Institute.
    5. Jan Toporowski, 2013. "The Elgar Companion to Hyman Minsky," Review of Political Economy, Taylor & Francis Journals, vol. 25(1), pages 175-177, January.
    6. Kemp-Benedict, Eric, 2015. "A Minskian extension to Kaleckian dynamics," MPRA Paper 65186, University Library of Munich, Germany.
    7. Eckhard Hein & Till van Treeck, 2010. "‘Financialisation’ in Post-Keynesian Models of Distribution and Growth: A Systematic Review," Chapters,in: Handbook of Alternative Theories of Economic Growth, chapter 13 Edward Elgar Publishing.
    8. Hiroaki Sasaki & Shinya Fujita, 2012. "The Importance Of The Retention Ratio In A Kaleckian Model With Debt Accumulation," Metroeconomica, Wiley Blackwell, vol. 63(3), pages 417-428, July.
    9. Maria Nikolaidi & Engelbert Stockhammer, 2017. "Minsky Models: A Structured Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 31(5), pages 1304-1331, December.
    10. Sébastien Charles, 2008. "Teaching Minsky's financial instability hypothesis: a manageable suggestion," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 31(1), pages 125-138, September.
    11. Matthew Greenwood-Nimmo, 2009. "The Self-Defeating Pursuit of Stability," EKONOMIAZ. Revista vasca de Economía, Gobierno Vasco / Eusko Jaurlaritza / Basque Government, vol. 72(03), pages 224-243.
    12. Marc Lavoie & Wynne Godley, 2000. "Kaleckian Models of Growth in a Stock-Flow Monetary Framework: A Neo-Kaldorian Model," Macroeconomics 0004049, EconWPA.
    13. Jan Toporowski, 2012. "The Monetary Theory of Kalecki and Minsky," Working Papers 172, Department of Economics, SOAS, University of London, UK.
    14. L. Randall Wray, 2007. "Endogenous Money: Structuralist and Horizontalist," Economics Working Paper Archive wp_512, Levy Economics Institute.
    15. Van Den Hauwe Ludwig, 2016. "Understanding Financial Instability: Minsky Versus the Austrians," Journal des Economistes et des Etudes Humaines, De Gruyter, vol. 22(1), pages 25-60, July.
    16. Jussi Ahokas, 2012. "Geographies of Monetary Economy and the European economic crisis," ERSA conference papers ersa12p437, European Regional Science Association.
    17. Greg Hannsgen, 2005. "Minsky's acceleration channel and the role of money," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 27(3), pages 471-489.
    18. Engelbert Stockhammer & Jo Michell, 2014. "Pseudo-Goodwin cycles in a Minsky model," Working Papers PKWP1405, Post Keynesian Economics Society (PKES).
    19. Eugenio Caverzasi, 2012. "From the Financial Instability Hypothesis to the theory of Capital Market Inflation: a structural interpretation of the sub-prime crisis," DEM Working Papers Series 018, University of Pavia, Department of Economics and Management.
    20. Eugenio Caverzasi, 2014. "Minsky and the Subprime Mortgage Crisis: The Financial Instability Hypothesis in the Era of Financialization," Economics Working Paper Archive wp_796, Levy Economics Institute.
    21. Jan Toporowski, 2012. "Corporate Liquidity and Financial Fragility: The Role of Investment, Debt and Interest," Working Papers 169, Department of Economics, SOAS, University of London, UK.
    22. Rohit Azad, 2017. "Plurality in Teaching Macroeconomics," Working Papers 1719, New School for Social Research, Department of Economics.
    23. Marco, Passarella, 2011. "Systemic financial fragility and the monetary circuit: a stock-flow consistent approach," MPRA Paper 28498, University Library of Munich, Germany.
    24. Passarella, Marco, 2011. "The two-price model revisited. A Minskian-Kaleckian reading of the process of 'financialization'," MPRA Paper 32033, University Library of Munich, Germany.
    25. Eric Tymoigne, 2010. "Detecting Ponzi Finance: An Evolutionary Approach to the Measure of Financial Fragility," Economics Working Paper Archive wp_605, Levy Economics Institute.

    More about this item

    Keywords

    MONEY ; FINANCIAL MARKET ; CANADA;

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian

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