Profile Major Works Resources

Hyman P. Minsky, 1919-1996.

Portrait of H.P.Minsky

American Post Keynesian economist at Washington University, St. Louis..

Originating from Chicago, Hyman Minsky initially studied mathematics at the University of Chicago, but switched ton economics and eventually received his Ph.D. from Harvard in 1954, under Alvin H. Hansen.  Minsky taught at Carnegie-Mellon, Brown and Berekely, before taking up a position at Washington University in 1965.

Hyman Minsky is most famous for his financial instability hypothesis.  His theory is articulated in his 1975 John Maynard Keynes, and with more detail in his 1986 Stabilizing an Unstable economy.

Minsky began his JMK book as a general critique of the Neo-Keynesian synthesis view of the work of John Maynard Keynes from a Post Keynesian perspective, accusing conventional economists of assuming stability of long-run full employment, ignoring uncertainty ("Hamlet without the prince"), missing the (Kaleckian) connection between investment and profits, and essentially overlooking the role and vital importance that the financial system plays in a modern economy and its potentially destabilizing features, which (Minsky argues) was the core of Keynes's concerns.

Minsky articulated a business cycle theory driven by financially-fueled investment. Minsky's emphasis was in noting how the character of the financing changes over the course of the cycle. Minsky proposes that in the upswing, investment is financed by a mixture of retained profits and borrowed funds. But as the boom continues, firms are encouraged to borrow more and expand more, thus the financial composition changes increasingly towards debt, and ever more profits are designated to service it.  Firms (and households) moved to ever more risky financing strategies, and with increasing debt burdens, firms became "financially fragile", where lower-than-expected earnings or a slight change in interest rates can have massive repercussions on a heavily indebted firm.  A firm squezed in this manner will not necessarily fail immediately, but be pushed into Ponzi financing, acquiring debt to pay off debt, postponing the reckoning while increasing its fragility.  The failure subsequently cascades to its lenders, and the credit crunch in the financial system and the economic system decline in the mortal embrace of a Fisherian debt-deflation crisis.  

Minsky believe financial instability is a characteristic feature of the post-war economy, and that the very institutional and policy measures introduced by governments to to stabilize economies themselves sometimes contribute to the problem. Reliance on their availability induces risky behavior and encourages unsustainable booms to go on for longer, and accumulate even greater debt burdens, so that the unraveling becomes even more devastating than otherwise.  Nonetheless, Minsky saw vital roles active government fiscal policy and monetary policy (more the Fed's lender of last resort function than its interest rate policy) to keep downturns contained so that they do not turn into depressions, although remaining skeptical on just how effective they might be if considered too late.



top1.gif (924 bytes)Top

Major Works of Hyman P. Minsky

  • "Central Banking and Money Market Changes", 1957, QJE [levy]
  • "Can "It" Happen Again?", 1963, in Carson, editor, Banking and Monetary Studies.
  • "Longer Waves in Financial Relations: Financial factors in more severe depressions", 1964, AER. [levy]
  • "The Modeling of Financial Instability: An introduction", 1974, Modelling and Simulation. [levy]
  • John Maynard Keynes, 1975.
  • "The Financial Instability Hypothesis: A restatement", 1978, Thames Papers on Political Economy. [levy]
  • "Can "It" Happen Again? A reprise", 1982, Challenge [levy]
  • Can "It" Happen Again? Essays on instability and finance, 1982.
  • "Debt deflation processes in today’s institutional environment", 1982, BNLQR [psl] [levy]
  • "The Financial-Instability Hypothesis: Capitalist processes and the behavior of the economy", 1982, in Kindleberger and Laffargue, editors, Financial Crises. [levy]
  • "Beginnings", 1985, BNLQR.
  • Stabilizing an Unstable Economy, 1986.
  • "The Global Consequences of Financial Deregulation", 1986, Marcus Wallenberg Papers on International Finance. [levy]
  • "Sraffa and Keynes: Effective demand in the long-run", 1988 [1985 draft at levy]
  • "The Macroeconomic Safety Net: Does it need to be improved?", 1989, in H.P. Gray, editor, Modern International Environment. [draft, levy]
  • "Schumpeter: Finance and evolution", 1990, in Heertje et al, editors, Evolving Technology and Market Structure. [draft levy]
  • "Financial Crises: Systemic or Idiosyncratic?", 1991 [levy: paper, audio]
  • "Market Processes and Thwarting Systems" with Piero Ferri, 1991 
  • "The Transition to a Market Economy: Financial Options", 1991
  • "Reconstituting the United States' Financial Structure: Some Fundamental Issues", 1991
  • "The Capitalist Development of the Economy and the Structure of Financial Institutions"
  • "The Financial Instability Hypothesis: A clarification", 1991, in Feldstein, editor, Risk of Financial Crisis. [draft levy]
  • "Financial Instability Hypothesis", 1993, in Arestis and Sawyer, Handbook of Radical Political Economy
  • "Finance and Stability: The Limits of Capitalism", 1993  [levy]
  • "Market Structures and Investment Behavior", 1993 [levy]
  • "Business Cycles in Capitalist Economies", 1994, MIJCF.




top1.gif (924 bytes)Top

Resources on Hyman P. Minsky

  • Hyman Minsky page at Levy Institute
  • Minsky archive at Levy, with Minsky's papers & drafts
  • Minsky obituary at NY Times, 1996
  • "The Relevance of Hyman Minsky" by Robert Pollin, 1997, Challenge [pdf]
  • "The Economic Contributions of Hyman Minsky: varieties of capitalism and institutional reform" by D. Papadimitriou and L.R. Wray, 1998, ROPE, [pdf]
  • "On Minsky's Agenda for Reform", by James Tobin, 1999, [wp cwls]
  • "Minsky's Analysis of Financial Capitalism" by Dimitri B. Papadimitriou & L. Randall Wray, 1999 [pdf]
  • "Minsky and the Mainstream: Has recent research rediscovered financial Keynesianism?" by Steven M. Fazzari, 1999 [pdf]
  • "Minsky Crisis" by L. Wrandall Wray, 2011 [pdf]
  • "Marx, Keynes and Minsky on the instability of the capitalist growth process and the nature of government economic policy" by John Crotty, 1986 [pdf]
  • "The Investment Decision of the Post-Keynesian Firm: A suggested microfoundation for Minsky's investment instability thesis" by James Crotty & Jonathan Goldstein, 1992 [ssrn]
  • "Financial Instability: Minsky, Marx and Chaos" by Steve Keen
  • "Finance and Economic Breakdown: modelling Minsky's 'financial instability hypothesis'" by Steve Keen, 1995, JPKE
  • "'It' Happened, but Not Again: A Minskian Analysis of Japan's Lost Decade" by Marc-André Pigeon, 2000 [pdf]
  • "Endogenous Money, Financial Fragility, and Dual Structurization of the Economy" by Hiroshi Nagano
  • "Minsky's theory of financial crisis in a global context" by Martin Wolfson, 2002, JEI [pdf]
  • "The Limits of Minsky's financial instability hypothesis for explaining the financial crisis", by Thomas I. Palley, 2010 Monthly Review [online]
  • "Schumpeter, Minsky and the Financial Instability Hypothesis", by Mark Knell, 2011 [pdf]
  • "Rethinking Economics for a New Era of Financial Regulation: the political economy of Hyman Minsky" by Charles J. Whalen, 2011 [pdf]
  • "Minsky and the Crisis: the financial instability hypothesis" by Alessandro Vercelli, 2015 [slides pdf]
  • Why Minsky Matters: An introduction to the work of a maverick economist by L. Randall Wray, 2015
  • Wikipedia


top1.gif (924 bytes)Top

All rights reserved, Gonçalo L. Fonseca