Financial frictions and crises in a Minskyan perspective

Giancarlo Bertocco and Andrea Kalajzić

No 1_2022, STOREPapers from Associazione Italiana per la Storia dell'Economia Politica - StorEP

Abstract: The concept of financial frictions is at the core of the Financial Friction Approach (FFA) which underlines that to explain the financial crisis of 2007-2008 it is sufficient to add the financial system to the New Keynesian DSGE model. Many economists have cited Minsky among those who “emphasized the importance of financial frictions.” The aim of this work is: i) to show that Minsky cannot be considered the precursor of the FFA and that FFA does not allow for a solid explanation of financial crises; ii) to present a sound explanation of the financial instability affecting capitalist economies based on two teachings characterizing Minsky’s work. The first consists in Minsky’s interpretation of Keynes’s General Theory, which recovers the revolutionary elements of Keynes’s thought neglected by the Neoclassical Synthesis. The second teaching consists in underlining the need to integrate Keynes’s and Schumpeter’s theoretical frameworks.

Keywords: Financial markets; Crises; Keynes; Schumpeter; Minsky (search for similar items in EconPapers)
JEL-codes: E10 E20 E30 E40 E44 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2022-02
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.storep.org/wp/wp-content/uploads/2022/03/WP-1-2022.pdf (application/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:hpo:wpaper:1_2022

Access Statistics for this paper

More papers in STOREPapers from Associazione Italiana per la Storia dell'Economia Politica - StorEP Contact information at EDIRC.
Bibliographic data for series maintained by Mario Aldo Cedrini ().