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Minsky’s Moment

An Insider’s View on the Economics of Hyman Minsky

Piero Ferri

At its core this book sets out the analytical and methodological foundations of Minsky’s financial instability hypothesis (FIH). Grounded on the joint work of Piero Ferri and Hyman Minsky, it offers insightful analysis from a unique insider's perspective. The objective is to deepen and enlarge the toolbox used by Minsky and to place the analysis within a dynamic perspective where a meta model, based upon regime switching, can encompass the different forms that the FIH can assume.
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Chapter 9: The foundations of medium-run dynamics

Piero Ferri

Extract

This chapter tries to update the discussion on the state of the literature, which in Chapter 6 was centered upon the IS–LM model. At present, the debate on the nature of macroeconomics seems to be dominated by the presence of a substantial methodological similarity between the various paradigms. This similarity is centered around the maximizing role of agents in a dynamic environment, where the driving forces are exogenous shocks while the main mechanisms of transmission are based upon the concept of intertemporal substitution. This methodological monism is critically considered, and the foundations of different dynamics are put forward. They refer to a medium-run period, and are based upon disequilibrium where monetary and real aspects of both demand and supply aspects are taken into consideration.

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