Capital instability, uncertainty and the role of monetary authorities: a Minsky reading
Abstract
This paper is a study of the idea of the inherent instability of capitalism in
Minsky’s conception. We begin by describing how Minsky connects the idea of financial
fragility and instability with the instability of capitalism, Then we analyze two important features
of Minsky’s explanation of the economy’s inherent tendency toward financial fragility
and crises. The first is the subjective behavior of the economic agents, given the uncertainty
in the economic world. The second is the role of banks and monetary authorities when the
money supply is considered, as here, endogenous.
JEL Classification: B22; B31; G01; P10.
Keywords: History of economic thought Minsky financial system Keynesianism