Financial Fragility and Investment in the Capitalist Economy The Economic Legacy of Hyman Minsky, Volume II
The Economic Legacy of Hyman Minsky, Volume II
Edited by Riccardo Bellofiore and Piero Ferri
Chapter 2: Ceilings and floors, growth and the NAIRU
2. Ceilings and ﬂoors, growth and the NAIRU Piero Ferri* 1 INTRODUCTION: MINSKY’S CONTRIBUTION Although it is widely agreed that Hyman Minsky’s main contributions lie in the ﬁeld of ﬁnancial instability, this is only the tip of the iceberg, as Ferri (1992) tried to show some time ago. His analysis derives from a broader ‘vision’, to use the language of one of his mentors, Schumpeter, that implies both the existence of endogenous forces leading to economic instability and the presence of institutional thwarting mechanisms that try to prevent them (Ferri and Minsky, 1992). It is the interplay between these two forces that characterizes the dynamics of economic systems, in which the evolution of the institutional aspects play a fundamental part. This vision is the leitmotiv that lies behind most of Minsky’s contributions and has been incorporated in different analytical expressions, starting from one of his initial contributions: the ceiling and ﬂoor model of growth (Minsky, 1959). The importance of this article can be detected at three levels (see Ferri, 1997). First of all, it belongs to the history of endogenous cycles and growth. In the second place, it opens up the way to the introduction of non-linearities in economics. Finally, it exempliﬁes the interplay between market forces and institutions, with the working of the economy characterized by an unconstrained behaviour in a corridor and by a constrained dynamics when certain barriers are reached. The purpose of this chapter is to further develop this strategy of research. In particular, I...
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