Origins of economic instability: Real, financial or both? - Part I: An account of Minsky's financial instability hypothesis

The 1990s have put the issue of global economic stability under the spotlight. This calls for a re-examination of the economic theory surrounding the subject. Here a three-fold classification is useful. The first grouping locates the source of stability in the workings of the real sector of the econ...

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Bibliographic Details
Published inSouth African journal of economic and management sciences Vol. 2; no. 1; pp. 1 - 20
Main Author J. S. Hart
Format Journal Article
LanguageEnglish
Published AOSIS 01.03.1999
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Summary:The 1990s have put the issue of global economic stability under the spotlight. This calls for a re-examination of the economic theory surrounding the subject. Here a three-fold classification is useful. The first grouping locates the source of stability in the workings of the real sector of the economy. A second, following Hyman Minsky, contends that instability arises in the financial sector. A third grouping draws on a distinction by Schumpeter to argue that any effective analysis of stability or instability requires a theoretical framework that integrates both the real and financial sectors at the most basic level. In the light of the current financial crisis which originated in South-East Asia, the second grouping appears most relevant. Part II will give an appraisal of Minsky's theory.
ISSN:1015-8812
2222-3436
DOI:10.4102/sajems.v2i1.2560