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Minsky and the Mainstream: Has Recent Research Rediscovered Financial Keynesianism

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  • Steven M. Fazzari

    (Washington University in St. Louis)

Abstract

Hyman Minsky's research emphasized the central role of finance in modern economies at a time when finance was not important in most mainstream macroeconomic research. But in the 1980s, mainstream research began to explore the role of finance in firm and consumer behavior. This paper examines the extent to which this recent mainstream research captures Minsky's insights and whether it extends his work. I argue that recent work on micro foundations—the link between economic behavior and finance—complements Minsky's contributions and corresponding empirical research provides strong support for his argument that financial conditions affect expenditure. But large differences remain between Minsky and the mainstream paradigm, especially in the role played by the financial system in macroeconomic fluctuations. Furthermore, there is much in Minsky's Big Government–Big Bank policy framework that does not appear in recent mainstream work.

Suggested Citation

  • Steven M. Fazzari, 2000. "Minsky and the Mainstream: Has Recent Research Rediscovered Financial Keynesianism," Macroeconomics 0004025, University Library of Munich, Germany.
  • Handle: RePEc:wpa:wuwpma:0004025
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    References listed on IDEAS

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    1. Mark Gertler, 1988. "Financial structure and aggregate economic activity: an overview," Proceedings, Federal Reserve Bank of Cleveland, pages 559-596.
    2. Steven M. Fazzari & Bruce C. Petersen, 1993. "Working Capital and Fixed Investment: New Evidence on Financing Constraints," RAND Journal of Economics, The RAND Corporation, vol. 24(3), pages 328-342, Autumn.
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    Cited by:

    1. Marc Lavoie, 2020. "Was Hyman Minsky a post-Keynesian economist?," Review of Evolutionary Political Economy, Springer, vol. 1(1), pages 85-101, May.
    2. Leszek Kąsek & Marek Lubiński, 2010. "Hyman Minsky – wczoraj i dziś," Contemporary Economics, University of Economics and Human Sciences in Warsaw., vol. 4(1), March.
    3. Leila E Davis & Joao Paulo A de Souza & Gonzalo Hernandez, 2019. "An empirical analysis of Minsky regimes in the US economy," Cambridge Journal of Economics, Oxford University Press, vol. 43(3), pages 541-583.
    4. Snowden, Nicholas & Muñoz, Jesús, 2012. "Building a BRIC? Stock Market Opening and Investment Finance in India since Liberalization," World Development, Elsevier, vol. 40(6), pages 1109-1121.

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