An Insider’s View on the Economics of Hyman Minsky
Chapter 5: Prices, employment, and profits
This chapter reproduces the first article I co-authored with Minsky. The central message of the paper is the necessity of endogenizing profit share and, therefore, cash flow within a dynamic context. In other words, the paper can be seen as an attempt to bridge the analysis of profit determination contained in Minsky’s financial instability hypothesis with his dynamic contributions contained in his book Can “It” Happen Again? The basic analytical approach is that of linking prices, profits and investment in a double feedback relationship so that one of the pillars of the financial instability analysis, that is, cash flow, is made endogenous. Furthermore, the paper includes a methodological contribution regarding the reconciliation between micro aspects and macro results.
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