The Elgar Companion to Hyman Minsky

The Elgar Companion to Hyman Minsky

Elgar original reference

Edited by Dimitri B. Papadimitriou and L. Randall Wray

This Companion provides a timely and engaging treatment of Hyman Minsky’s approach to economics, which is enjoying a renewed appreciation because of its prescient analysis of the slow but sure transformation of the capitalist economy in the post-war period. Many have called the global financial crisis that began in the United States in 2007 a ‘Minsky crisis’, and these original contributions demonstrate precisely why both academic economists as well as policymakers have turned to Minsky for guidance. The book brings together the foremost Minsky scholars to provide a comprehensive overview of his approach, with extensions to bring the analysis up to date.

Chapter 10: Financial Instability and Agents’ Heterogenity: A Post Minskyan Research Agenda

Tiziana Assenza, Domenico Delli Gatti and Mauro Gallegati

Subjects: economics and finance, history of economic thought


10 Financial instability and agents’ heterogeneity: a post Minskyan research agenda Tiziana Assenza, Domenico Delli Gatti and Mauro Gallegati Introduction Has the economics profession learned Hyman Minsky’s lesson? Ask a fellow economist brought up in the neoclassical tradition and the answer will be that there is no lesson to be learned because (i) the Financial Instability Hypothesis (FIH) was cast in purely aggregative old fashioned Keynesian terms and (ii) it yields extreme, catastrophic and therefore unrealistic predictions.1 Ask a fellow economist brought up in the post-Keynesian tradition and the answer will be that the profession has definitely not learned the Minskyan lesson and never will because there is no way for Minsky’s insights on financially sophisticated capitalism to penetrate the protective shield of the neoclassical mainstream based on the ‘village fair’ paradigm. Our impression is that the landscape of economics is much more rugged than these two apparently alternative answers would lead us to think. If, in fact, they were true, financial instability would not show up as a hot topic in the most thriving research agenda. But this, clearly, is not the case. The majority of economists either ignore Minsky or consider him plainly wrong; since the mid-80s, however, a few influential economists who have not embraced any unorthodox credo have grown more receptive to his ideas, and are eager to incorporate them in their models – even if diluted and sometimes disguised – in order to make them more palatable to the conventional ‘representative’ macroeconomist. Due to the asymmetric information...

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