Macroeconomics Meets Hyman P. Minsky: The Financial Theory of Investment

L. Randall Wray and Eric Tymoigne

Chapter 12 in Macroeconomic Theory and Macroeconomic Pedagogy, 2009, pp 234-251 from Palgrave Macmillan

Abstract: Abstract In this chapter we will present a theory of the financing of investment in a modern capitalist economy. Our exposition will closely follow the approach developed by Hyman Minsky, arguably the most important contributor to our understanding of this topic. While Minsky began his research in the 1950s and continued to refine his theory until his death in 1996, his ideas are largely absent from undergraduate textbooks. In addition, his approach has been largely ignored by the mainstream of the profession even though the inclusion of some of his ideas in models similar to the New Consensus provides relevant insights (Lavoie, 2008; Weise and Barbera, 2008). This does not mean that his work was unknown, as it was long embraced by Post Keynesian economists and by Wall Street practitioners who recognized the real-world relevance of Minsky’s arguments. Indeed, a few conventional economists — including some Nobel laureates (some of whom were personal friends of Minsky) — were influenced by his ideas. Still, as we prepare this chapter, there is little doubt that interest in his theory is at an all-time peak (e.g. Lahart, 2007; Chancellor, 2007; McCully, 2007). Indeed, the current financial crisis that began with a collapse of the sub-prime mortgage market in the US in 2007 provides a compelling reason to show how his approach provides students with a grounding in the workings of financial capitalism. Even if the spreading global financial crisis is successfully contained this time around, it is likely that analyses will incorporate a substantial dose of Minsky’s ideas for many years to come.

Keywords: Asset Price; Hedge Fund; Capital Asset; Supply Price; Demand Price (search for similar items in EconPapers)
Date: 2009
References: Add references at CitEc
Citations: View citations in EconPapers (2)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Working Paper: Macroeconomics Meets Hyman P. Minsky: The Financial Theory of Investment (2008)
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:pal:palchp:978-0-230-29166-9_13

Ordering information: This item can be ordered from
http://www.palgrave.com/9780230291669

DOI: 10.1007/978-0-230-29166-9_13

Access Statistics for this chapter

More chapters in Palgrave Macmillan Books from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().