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Minskian Financial Instability Hypothesis and Its Post Keynesian Roots: A Theoretical Approach

Year 2019, Volume: 27 Issue: 40, 105 - 118, 30.04.2019
https://doi.org/10.17233/sosyoekonomi.2019.02.06

Abstract

Minsky’s financial instability hypothesis (FIH) has the main assumptions of the Post Keynesian macroeconomics. The main assumptions of the FIH and its Post Keynesian roots are discussed in this paper in a detailed way. Thus, it is seen that FIH is a business cycle analysis within Post Keynesian framework, the theoretical underpinnings of the Post Keynesian macroeconomic analysis are put in the forefront for understanding business cycles in Minsky’s analysis.

References

  • Arestis, P. & M. Glickman (2002), “Financial Crisis in Southeast Asia: Dispelling Illusion the Minskyan Way”, Cambridge Journal of Economics, 26(2), 237-260.
  • Basu, D. & D. Das (2017), “Profitability and Investment: Evidence from Indıa’s Organized Manufacturing Sector”, Metroeconomica, 68(1), 47-90.
  • Charles, S. (2008), “Teaching Minsky Instability Hypothesis: A Manageable Suggestion”, Journal of Post Keynesian Economics, 31(1), 125-138.
  • Cin, M.F. (2017), “Post-Keynezyen İktisatta Açık Sistem Ontolojisi: Sheila C. Dow’un Babylonian Düşünce Yaklaşımı Üzerine Bir İnceleme”, Ç.Ü. Sosyal Bilimler Enstitüsü Dergisi, 25(2), 151-166.
  • Davidson, P. (1998), “Post Keynesian Employment Analysis and the Macroeconomics of OECD Unemployment”, The Economic Journal, 108(448), 817-831.
  • Doruk, Ö.T. (2011), “Post Keynezyen İktisadi Birey ve Post Keynezyen İktisat Metodolojisinde Krizlerin Dinamikleri Üzerine Yazınsal Bir İnceleme:1929 ve 2008 Krizi Karşılaştırması”, içinde: İ. Şiriner vd. (eds.), Politik İktisat, Kriz ve Kalkınma, Londra: IJOPEC Publications.
  • Jespersen, J. (2009), Macroeconomic Methodology: A Post Keynesian Perspective, Cheltenham: Edward Elgar.
  • Hubbard, T.P. & Y. Sağlam (2006), Stochastic Processes, Itô Calculus, and Applications in Economics, <http://home.uchicago.edu/hickmanbr/uploads/chapter5_3.pdf>, 20.12.2018.
  • Kalečki, M. (1937), “The Principle of Increasing Risk”, Economica, 4, 440-447.
  • Kalečki, M. (1954), Theory of Economic Dynamics, London: Allen and Unwin.
  • Keen, S. (2015), “Post Keynesian Theories of Crisis”, The American Journal of Economics and Sociology, 74(2), 298-324.
  • Keen, S. (1995), “Finance and Economic Breakdown: Modeling Minsky’s Financial Instability Hypothesis”, Journal of Post Keynesian Economics, 17(4), 607-635.
  • Keynes, J.M. (1921), A Treatise on Probability, London: Macmillan.
  • Keynes, J.M. (1936), The General Theory of Employment, Interest and Money, London: Macmillan.
  • Kyland, F.E. & E. Prescott (1982), “Time to Build and Aggregate Fluctuations”, Econometrica, 50(6), 1345- 1370.
  • Lavoie, M. (1997), “Loanable Funds, Endogenous Money and Minsky’s Financial Fragility Hypothesis”, in: A.J. Cohen & H. Hagemann & J. Smithin (eds.), Money, Financial Institutions, and Macroeconomics, Boston: Kluwer Academic, 67-82.
  • Leao, P. (2016), A Post-Keynesian Model of the Business Cycle, <https://www.boeckler.de/pdf/v_2016_10_21_leao.pdf>, 19.12.2018.
  • Lucas Jr., Robert E. & E.C. Prescott (1971), “Investment Under Uncertainty”, Econometrica, 39(5), 659-681.
  • Mankiw, G.N. (1990), “A Quick Refresher Course in Macroeconomics”, Journal of Economic Literature, 28(4), 1645-1660.
  • McCulley, P. (2009), “The Shadow Banking System and Hyman Minsky’s Economic Journey”, Research Foundation Publications, 5, 257-268.
  • Minsky, H.P. (1977), “The Financial Instability Hypothesis: An Interpretation of Keynes and an Alternative to Standard Theory”, Nebraska Journal of Economics and Business, 16(1), 516.
  • Minsky, H.P. (1982), Can It Happen Again, Essays on Instability and Finance, New York: M.E Sharpe.
  • Minsky, H.P. (1992), “The Financial Instability Hypothesis”, Levy Economics Institute of Bard College Working Paper, 74, Levy Economics Institute of Bard College, Annandale-onHudson, New York.
  • Modigliani, F. & M.H. Miller (1958), “The Cost of Capital, Corporation Finance and the Theory of Investment”, The American Economic Review, 48(3), 261-297.
  • Muth, F. (1961), “Rational Expectations and the Theory of Price Movements”, Econometrica, 29(3), 315-335.
  • Nikiforos, M. & G. Zezza (2017), “Stock-flow Consistent Macroeconomic Models: A Survey”, Levy Economics Institute of Bard College Working Paper, 891, Levy Economics Institute of Bard College, Annandale-on-Hudson, New York.
  • Özkaramete-Coşkun, N. (2009), “Finansal Kriz: Keynes ve Minsky”, Ekonomik Yaklaşım, 20(73) ,112.
  • Palley, T.I. (2011), “A Theory of Minsky Super-Cycles and Financıal Crises”, Contributions to Political Economy, 30(1), 31-46.
  • Robinson, J.V. (1962), Essays in the Theory of Economic Growth, London: Macmillan.
  • Sargent, T.J. & N. Wallace (1975), “Rational’Expectations, the Optimal Monetary Instrument, and the Optimal Money Supply Rule”, Journal of Political Economy, 83(2), 241-254.
  • Skott, P. (2011), “Business Cycles”, UMASS Economics Department Working Paper Series, No. 129, University of Massachusetts, Amherst.
  • Steindl, J. (1982), “The Role of Household Saving in the Modern Economy”, Banca Nazionale del Lavoro Quarterly Review, 35(140), 69-88.
  • Toporowski, J. (2005), Theories of Financial Disturbance: An Examination of Critical Theories of Finance from Adam Smith to the Present Day, Cheltenham: Edward Elgar.
  • Variato, A.M. (2017), The Economics of Hyman Minsky: Critical Assessments Open Questions and Enhancements, <http://wwwdata.unibg.it/dati/corsi/110012/85169P1%20Hyman%20Minsky%20sinth.pdf>, 19.12.2018.
  • Vercelli, A. (2009), “Minsky Moments, Russell Chickens, and Gray Swans: The Methodological Puzzles of the Financial Instability Analysis”, Levy Economics Institute of Bard College Working Paper, 582, Levy Economics Institute of Bard College, Annandale-on-Hudson, New York.

Minskian Financial Instability Hypothesis and Its Post Keynesian Roots: A Theoretical Approach

Year 2019, Volume: 27 Issue: 40, 105 - 118, 30.04.2019
https://doi.org/10.17233/sosyoekonomi.2019.02.06

Abstract

Minsky’e ait Finansal İstikrarsızlık Hipotezi (FİH), metodolojik olarak Post Keynesyen makro iktisadın ana varsayımlarını taşımaktadır. FİH’in temelinde yatan ana varsayımlar ve FİH’in Post Keynesyen kökenleri bu çalışmada etraflıca tartışılmaktadır. Dolayısıyla FİH’in Post Keynesyen çerçevede bir iş çevrimi analizi olduğu görülürken, özellikle Post Keynesyen makro iktisadi analizin temelinde yer alan varsayımların Minsky’nin analizinde iş çevrimlerinin anlaşılması açısından ön plana çıktığı görülmektedir.

References

  • Arestis, P. & M. Glickman (2002), “Financial Crisis in Southeast Asia: Dispelling Illusion the Minskyan Way”, Cambridge Journal of Economics, 26(2), 237-260.
  • Basu, D. & D. Das (2017), “Profitability and Investment: Evidence from Indıa’s Organized Manufacturing Sector”, Metroeconomica, 68(1), 47-90.
  • Charles, S. (2008), “Teaching Minsky Instability Hypothesis: A Manageable Suggestion”, Journal of Post Keynesian Economics, 31(1), 125-138.
  • Cin, M.F. (2017), “Post-Keynezyen İktisatta Açık Sistem Ontolojisi: Sheila C. Dow’un Babylonian Düşünce Yaklaşımı Üzerine Bir İnceleme”, Ç.Ü. Sosyal Bilimler Enstitüsü Dergisi, 25(2), 151-166.
  • Davidson, P. (1998), “Post Keynesian Employment Analysis and the Macroeconomics of OECD Unemployment”, The Economic Journal, 108(448), 817-831.
  • Doruk, Ö.T. (2011), “Post Keynezyen İktisadi Birey ve Post Keynezyen İktisat Metodolojisinde Krizlerin Dinamikleri Üzerine Yazınsal Bir İnceleme:1929 ve 2008 Krizi Karşılaştırması”, içinde: İ. Şiriner vd. (eds.), Politik İktisat, Kriz ve Kalkınma, Londra: IJOPEC Publications.
  • Jespersen, J. (2009), Macroeconomic Methodology: A Post Keynesian Perspective, Cheltenham: Edward Elgar.
  • Hubbard, T.P. & Y. Sağlam (2006), Stochastic Processes, Itô Calculus, and Applications in Economics, <http://home.uchicago.edu/hickmanbr/uploads/chapter5_3.pdf>, 20.12.2018.
  • Kalečki, M. (1937), “The Principle of Increasing Risk”, Economica, 4, 440-447.
  • Kalečki, M. (1954), Theory of Economic Dynamics, London: Allen and Unwin.
  • Keen, S. (2015), “Post Keynesian Theories of Crisis”, The American Journal of Economics and Sociology, 74(2), 298-324.
  • Keen, S. (1995), “Finance and Economic Breakdown: Modeling Minsky’s Financial Instability Hypothesis”, Journal of Post Keynesian Economics, 17(4), 607-635.
  • Keynes, J.M. (1921), A Treatise on Probability, London: Macmillan.
  • Keynes, J.M. (1936), The General Theory of Employment, Interest and Money, London: Macmillan.
  • Kyland, F.E. & E. Prescott (1982), “Time to Build and Aggregate Fluctuations”, Econometrica, 50(6), 1345- 1370.
  • Lavoie, M. (1997), “Loanable Funds, Endogenous Money and Minsky’s Financial Fragility Hypothesis”, in: A.J. Cohen & H. Hagemann & J. Smithin (eds.), Money, Financial Institutions, and Macroeconomics, Boston: Kluwer Academic, 67-82.
  • Leao, P. (2016), A Post-Keynesian Model of the Business Cycle, <https://www.boeckler.de/pdf/v_2016_10_21_leao.pdf>, 19.12.2018.
  • Lucas Jr., Robert E. & E.C. Prescott (1971), “Investment Under Uncertainty”, Econometrica, 39(5), 659-681.
  • Mankiw, G.N. (1990), “A Quick Refresher Course in Macroeconomics”, Journal of Economic Literature, 28(4), 1645-1660.
  • McCulley, P. (2009), “The Shadow Banking System and Hyman Minsky’s Economic Journey”, Research Foundation Publications, 5, 257-268.
  • Minsky, H.P. (1977), “The Financial Instability Hypothesis: An Interpretation of Keynes and an Alternative to Standard Theory”, Nebraska Journal of Economics and Business, 16(1), 516.
  • Minsky, H.P. (1982), Can It Happen Again, Essays on Instability and Finance, New York: M.E Sharpe.
  • Minsky, H.P. (1992), “The Financial Instability Hypothesis”, Levy Economics Institute of Bard College Working Paper, 74, Levy Economics Institute of Bard College, Annandale-onHudson, New York.
  • Modigliani, F. & M.H. Miller (1958), “The Cost of Capital, Corporation Finance and the Theory of Investment”, The American Economic Review, 48(3), 261-297.
  • Muth, F. (1961), “Rational Expectations and the Theory of Price Movements”, Econometrica, 29(3), 315-335.
  • Nikiforos, M. & G. Zezza (2017), “Stock-flow Consistent Macroeconomic Models: A Survey”, Levy Economics Institute of Bard College Working Paper, 891, Levy Economics Institute of Bard College, Annandale-on-Hudson, New York.
  • Özkaramete-Coşkun, N. (2009), “Finansal Kriz: Keynes ve Minsky”, Ekonomik Yaklaşım, 20(73) ,112.
  • Palley, T.I. (2011), “A Theory of Minsky Super-Cycles and Financıal Crises”, Contributions to Political Economy, 30(1), 31-46.
  • Robinson, J.V. (1962), Essays in the Theory of Economic Growth, London: Macmillan.
  • Sargent, T.J. & N. Wallace (1975), “Rational’Expectations, the Optimal Monetary Instrument, and the Optimal Money Supply Rule”, Journal of Political Economy, 83(2), 241-254.
  • Skott, P. (2011), “Business Cycles”, UMASS Economics Department Working Paper Series, No. 129, University of Massachusetts, Amherst.
  • Steindl, J. (1982), “The Role of Household Saving in the Modern Economy”, Banca Nazionale del Lavoro Quarterly Review, 35(140), 69-88.
  • Toporowski, J. (2005), Theories of Financial Disturbance: An Examination of Critical Theories of Finance from Adam Smith to the Present Day, Cheltenham: Edward Elgar.
  • Variato, A.M. (2017), The Economics of Hyman Minsky: Critical Assessments Open Questions and Enhancements, <http://wwwdata.unibg.it/dati/corsi/110012/85169P1%20Hyman%20Minsky%20sinth.pdf>, 19.12.2018.
  • Vercelli, A. (2009), “Minsky Moments, Russell Chickens, and Gray Swans: The Methodological Puzzles of the Financial Instability Analysis”, Levy Economics Institute of Bard College Working Paper, 582, Levy Economics Institute of Bard College, Annandale-on-Hudson, New York.
There are 35 citations in total.

Details

Primary Language Turkish
Journal Section Articles
Authors

Ömer Tuğsal Doruk 0000-0002-2382-1042

Yusuf Can Şahintürk This is me 0000-0003-3068-6405

Publication Date April 30, 2019
Submission Date May 27, 2018
Published in Issue Year 2019 Volume: 27 Issue: 40

Cite

APA Doruk, Ö. T., & Şahintürk, Y. C. (2019). Minskian Financial Instability Hypothesis and Its Post Keynesian Roots: A Theoretical Approach. Sosyoekonomi, 27(40), 105-118. https://doi.org/10.17233/sosyoekonomi.2019.02.06
AMA Doruk ÖT, Şahintürk YC. Minskian Financial Instability Hypothesis and Its Post Keynesian Roots: A Theoretical Approach. Sosyoekonomi. April 2019;27(40):105-118. doi:10.17233/sosyoekonomi.2019.02.06
Chicago Doruk, Ömer Tuğsal, and Yusuf Can Şahintürk. “Minskian Financial Instability Hypothesis and Its Post Keynesian Roots: A Theoretical Approach”. Sosyoekonomi 27, no. 40 (April 2019): 105-18. https://doi.org/10.17233/sosyoekonomi.2019.02.06.
EndNote Doruk ÖT, Şahintürk YC (April 1, 2019) Minskian Financial Instability Hypothesis and Its Post Keynesian Roots: A Theoretical Approach. Sosyoekonomi 27 40 105–118.
IEEE Ö. T. Doruk and Y. C. Şahintürk, “Minskian Financial Instability Hypothesis and Its Post Keynesian Roots: A Theoretical Approach”, Sosyoekonomi, vol. 27, no. 40, pp. 105–118, 2019, doi: 10.17233/sosyoekonomi.2019.02.06.
ISNAD Doruk, Ömer Tuğsal - Şahintürk, Yusuf Can. “Minskian Financial Instability Hypothesis and Its Post Keynesian Roots: A Theoretical Approach”. Sosyoekonomi 27/40 (April 2019), 105-118. https://doi.org/10.17233/sosyoekonomi.2019.02.06.
JAMA Doruk ÖT, Şahintürk YC. Minskian Financial Instability Hypothesis and Its Post Keynesian Roots: A Theoretical Approach. Sosyoekonomi. 2019;27:105–118.
MLA Doruk, Ömer Tuğsal and Yusuf Can Şahintürk. “Minskian Financial Instability Hypothesis and Its Post Keynesian Roots: A Theoretical Approach”. Sosyoekonomi, vol. 27, no. 40, 2019, pp. 105-18, doi:10.17233/sosyoekonomi.2019.02.06.
Vancouver Doruk ÖT, Şahintürk YC. Minskian Financial Instability Hypothesis and Its Post Keynesian Roots: A Theoretical Approach. Sosyoekonomi. 2019;27(40):105-18.