Business cycle theory: Where Minsky and Hayek agreed

Juan Ramón Rallo

The European Journal of the History of Economic Thought, 2023, vol. 30, issue 3, 443-467

Abstract: Hyman Minsky’s and Friedrich Hayek’s theories on the business cycle are often regarded as fundamentally divergent even when they share certain points in common: while Minsky attributes the cause of economic fluctuations to the inherently speculative tendencies of financial markets, Hayek blames central banks for credit manipulation. This paper aims to demonstrate that the similarities between both authors are greater than generally believed and that actually some consensus exists in their writings: both authors think that the economic boom is the result of an unsustainable credit expansion and that the depression can be explained by financial or, ultimately, real constraints.

Date: 2023
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DOI: 10.1080/09672567.2023.2202922

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