Financial Fragility and Central Bank: Are Minsky's Crisis and Austrian Business Cycle are Complementary?
DOI:
https://doi.org/10.6000/1929-7092.2015.04.21Keywords:
Economic crisis, Minsky, central bank, capitalism by fiat and financial instabilityAbstract
This article explains why Minsky's post-keynesian explanation tells only one side of the crisis' story. Indeed, the financial fragility of markets explains mainly the activity of Central bank i.e. the lender of last resort which increases the moral hazard phenomena and the socialization of risks. The regulated capitalism is, in this perspective, the cause of market instability and financial fragility. Indeed, moral hazard encourages commercial banks to take risks. In that respect, the economic policies implemented to manage the crisis of 2008 are inadequate.
References
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http://dx.doi.org/10.3917/rsg.254.0001
Palley, Thomas I. 2010. “The Limits of Minsky’s Financial Instability Hypothesis as an Explanation of the Crisis”. Monthly Review April 61: 11.
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http://dx.doi.org/10.1007/s11138-009-0097-1
Ravier, Adrian O., and Peter Lewin. 2012. “The Subprime Crisis”. The Quarterly Journal of Austrian Economics 15 (1): 45-74.
Robinson, Steve N., and Derrick P. Nantz. 2009. “Lessons to Be Learned from the Financial Crisis”. The Journal of Private Enterprise 25 (1): 5-22.
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Selgin, George. 2010. “Central Banks as Sources of Financial Instability”. The Independent Review 14 (4): 485-496.
Timberlake, Richard H. 1984. “The Central Banking Role of Clearing House Associations”. Journal of Money, Credit, and Banking, 16: 1-15.
http://dx.doi.org/10.2307/1992645
Whalen, Charles J. 2012. “Post-Keynesian Institutionalism after the Great Recession”. Levy Economics Institute of Bard College Working Paper n. 724, May.
White, Lawrence H. 2008. “How Did we Get into this Financial Mess?”. Cato Institute Briefing Papers, 110. November 18. http://www/cato.org/pub_display.php?pub_id=9788.
White, Lawrence H. 2015. “Skepticism About Minsky’s Financial Instability Hypothesis: A Comment on Flanders”. Econ Journal Watch 12 (1): 106-113.
Brossard, Olivier. 1998. “L’instabilité financière selon Minski: l'incertitude et la liquidité au fondement du cycle?”. Revue économique 49 (2): 407-435.
Carilli Anthony. M. and Gregory, M. Dempster. 2001. “Expectations in Austrian Business Cycle Theory: An Application of The Prisoner’s Dilemma”. The Review of Austrian Economics 14 (4): 319-330.
http://dx.doi.org/10.1023/A:1011985113936
Cartapanis, André. 2009. “Sous l’égide du g 20 : vers une nouvelle architecture de la finance mondiale?”. Revue de l’OFCE 110: 391-408.
http://dx.doi.org/10.3917/reof.110.0391
Cartapanis, André. 2011. “La crise financière et les politiques macro-prudentielles. Inflexion réglementaire ou nouveau paradigme?”. Revue Economique 62 (3): 349-382.
http://dx.doi.org/10.3917/reco.623.0349
Crotty, James. 2009. “Structural causes of the global financial crisis: a critical assessment of the new financial architecture”. Cambridge Journal of Economics 33: 563-580.
http://dx.doi.org/10.1093/cje/bep023
Facchini, François. 2004. “La théorie autrichienne des cycles: une théorie de la récurrence des erreurs collectives d’anticipation”. L’actualité Economique 20 (3): 67-94.
http://dx.doi.org/10.7202/010754ar
Facchini, François. 2010. “2007: une crise systémique ?”. Revue d’économie financière mars: 155-183.
Facchini, François and Mickaël Melki. 2013. “Efficient government size: France in the 20th century”. European Journal of Political Economy 31: 1-14.
http://dx.doi.org/10.1016/j.ejpoleco.2013.03.002
Fillieule, Renaud. 2010. L’école autrichienne d’économie Une autre hétérodoxie. France: Septentrion.
Friedman, Milton. 1977. “L’inflation phénomène monétaire”. In La crise: turbulences d’une économie prospère. Pairs: Dunod.
Hayek, Friedrich A. 1976. “Choice in Currency. A Way to Stop Inflation”. Occasional Paper. London: The Institute of Economics Affairs.
Horwitz, Steven 2008. “The Microeconomic Foundations of Macroeconomic Disorder: An Austrian Perspective on the Great Recession of 2008”. Mercatus Center, George Mason University, Working Paper n. 09-23.
Huerta de Soto, Jesus 2011. “Monnaie, crédit bancaire et cycles économiques”. Série L’économie formelle, collection L’esprit économique, Paris, L’Harmattan traduit de l’espagnol par Rosine Létinier.
Hüslmann, Guido. 2004. “Legal Tender Laws and Fractional-Reserve Banking”. The Journal of Libertarian Studies 1 (3): 33-55.
Janson, Nathalie 2011. “A Radical Proposal for Reforming the Banking System”. Available at SSRN: http://ssrn.com/ abstract=1773917
http://dx.doi.org/10.2139/ssrn.1773917
Keech, William R., and Michael C. Munger. 2015. “The Anatonmy of Government Failure”. Public Choice 164: 1-42.
http://dx.doi.org/10.1007/s11127-015-0262-y
Koppl, Roger. 2001. Big Players and the Economic Theory of Expectations. New York: Palgrave Macmillan.
Mathieu, Carherine. et Henri Sterdyniak. 2009. “La globalisation financière en crise”. Revue de l’OFCE 110: 13-73.
Mathieu, Catherine et Henri Sterdyniak. 2011. “Finances publiques, sorties de crise…”. Revue de l’OFCE 116: 17-60.
http://dx.doi.org/10.3917/reof.116.0017
Minski, Hyman P. 1986. Stabilizing an Unstable Economy. New Haven: Yale University Press. French translation, L’hypothèse d’instabilité financière, Bienne-Paris: Diaphanes, 2013.
Mises, Ludwig. 1971. The Theory of Money and Credit. New York: Foundation for Economic Education. French translation by Hervé de Quengo, available at http://herve.dequengo.free.fr/ Mises/Tmc/TMC_1_1.htm
Mueller, Anthony P., 2001. “Financial Cycles, Business Activity, and the Stock Market”. The Quarterly Journal of Austrian Economics 4 (1): 3-21.
http://dx.doi.org/10.1007/s12113-001-1000-5
Mulligan, Robert F., Robert Lirely and David Coffee. 2014. “An Empirical Examination of Minsky’s Financial Instability Hypothesis: From Market Process to Austrian Business Cycle”. Journal des Economistes et des Etudes Humaines 20 (1): 1-17.
http://dx.doi.org/10.1515/jeeh-2013-0005
Nakatani, Paulo et Herrera, Rémi. 2013. “Keynes et la crise. Hier et aujourd’hui”. Actuel Marx 1 (53): 153-168.
http://dx.doi.org/10.3917/amx.053.0153
Naszàlyi, Philippe. 2012. “Crise ? Vous avez dit: «crise»?”. La Revue des Sciences de Gestion 2 (254): 1-2.
http://dx.doi.org/10.3917/rsg.254.0001
Palley, Thomas I. 2010. “The Limits of Minsky’s Financial Instability Hypothesis as an Explanation of the Crisis”. Monthly Review April 61: 11.
Prychitko, David L. 2010. “Competing explanations of the Minsky moment: The financial instability by hypothesis in light of Austrian Theory”. Review of Austrian Economics 23: 199-221.
http://dx.doi.org/10.1007/s11138-009-0097-1
Ravier, Adrian O., and Peter Lewin. 2012. “The Subprime Crisis”. The Quarterly Journal of Austrian Economics 15 (1): 45-74.
Robinson, Steve N., and Derrick P. Nantz. 2009. “Lessons to Be Learned from the Financial Crisis”. The Journal of Private Enterprise 25 (1): 5-22.
Salin, Pascal. 2008. “The Failure of the Regulatory State”. Le Québécois Libre. N. 260. The French version of this article was published in Les Echos, October 1st 2008.
Salin, Pascal. 2010. Revenir au capitalisme. Pour éviter les crises. Paris: Odile Jacob.
Selgin, George. 2010. “Central Banks as Sources of Financial Instability”. The Independent Review 14 (4): 485-496.
Timberlake, Richard H. 1984. “The Central Banking Role of Clearing House Associations”. Journal of Money, Credit, and Banking, 16: 1-15.
http://dx.doi.org/10.2307/1992645
Whalen, Charles J. 2012. “Post-Keynesian Institutionalism after the Great Recession”. Levy Economics Institute of Bard College Working Paper n. 724, May.
White, Lawrence H. 2008. “How Did we Get into this Financial Mess?”. Cato Institute Briefing Papers, 110. November 18. http://www/cato.org/pub_display.php?pub_id=9788.
White, Lawrence H. 2015. “Skepticism About Minsky’s Financial Instability Hypothesis: A Comment on Flanders”. Econ Journal Watch 12 (1): 106-113.
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Published
2015-12-14
How to Cite
Facchini, F. (2015). Financial Fragility and Central Bank: Are Minsky’s Crisis and Austrian Business Cycle are Complementary?. Journal of Reviews on Global Economics, 4, 205–211. https://doi.org/10.6000/1929-7092.2015.04.21
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Special Issue - Hayek, Keynes and the Crisis: Analyses and Remedies. An Introduction
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