The COVID-19 Crisis: A Minskyan Approach to Mapping and Managing the (Western?) Financial Turmoil

Leonardo Burlamaqui and Ernani T. Torres Filho

Economics Working Paper Archive from Levy Economics Institute

Abstract: The COVID-19 crisis paralyzed huge parts of the planet in weeks. It not only infected the population but injected a gargantuan dose of uncertainty into the system. In that regard, as in many others, it is a phenomenon without precedent. As of the time of writing (May-June 2020), we are witnessing, simultaneously, a health crisis, an economic crisis, and a crisis of global governance as well. In the forthcoming months, it could well turn into a set of financial, social, and political crises most governments and international organizations are ill-prepared to handle. In this paper, what concerns us is the financial dimension of the crisis. The paper is divided into four sections. Following the introduction, the second section maps the financial dimension of the pandemic through an extension of Hyman Minsky's financial fragility analysis. The result is a three-pronged analytical framework that encompasses financial fragility, financial instability, and insolvency-triggered asset-liability restructuring processes. These are seen as three distinct but interconnected processes advancing financial fragility. The third section dissects how these three processes have been managed as they have unfolded since March 2020, underlining the key policy interventions and institutional innovations introduced so far, and suggesting further measures for addressing the forthcoming stages of the financial turmoil. The fourth section concludes the paper by pointing out the results as of June 2020 and highlights our intended analytical contribution to Minsky's theoretical framework.

Keywords: COVID-19 Crisis; Financial Fragilization; Financial Instability; Asset-Liabilities Restructuring; Minsky (search for similar items in EconPapers)
JEL-codes: E02 G01 G18 G20 (search for similar items in EconPapers)
Date: 2020-09
New Economics Papers: this item is included in nep-hme, nep-mac and nep-pke
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.levyinstitute.org/pubs/wp_968.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.levyinstitute.org/pubs/wp_968.pdf [301 Moved Permanently]--> https://levyweb.bard.edu/pubs/wp_968.pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:lev:wrkpap:wp_968

Access Statistics for this paper

More papers in Economics Working Paper Archive from Levy Economics Institute
Bibliographic data for series maintained by Elizabeth Dunn ( this e-mail address is bad, please contact ).