The Limits of Minsky’s Financial Instability Hypothesis as an Explanation of the Crisis Thomas I. Palley

In this paper the author argues that the interpretation of the financial crisis as a Minsky crisis is misleading, as the processes identified in Minsky’s financial instability hypothesis, even when playing a critical role in the crisis, are part of a larger economic drama involving the neoliberal growth model. Interpretation of the financial crisis as a purely financial crisis—in the spirit of a pure Minsky crisis—and the attendant policy prescription of simply fixing the financial system may, in fact, worsen stagnation.

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