A Theory of Minsky Super-cycles and Financial Crises

Palley, Thomas I.

doi:10.1057/9781137265821_8

Cited by 16 publications

(24 citation statements)

References 19 publications

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“…Recently, Palley (2010Palley ( , 2011 has argued Minsky's (1992a) financial instability hypothesis also involves a theory of long cycles. This long cycle explains why financial capitalism is prone to periodic crises and it provides a financially grounded approach to understanding long wave economics.…”

Section: The Minsky Financially Driven Basic Cycle and Super-cyclementioning

confidence: 99%

“…Minsky's financial instability hypothesis maintains that capitalist financial systems have an inbuilt proclivity to financial instability that tends to emerge in periods of economic tranquility. Minsky's framework is one of evolutionary instability and it can be thought of as resting on two different cyclical processes (Palley, 2010(Palley, , 2011. The first is a short cycle and can be labeled the "Minsky basic cycle".…”

Section: The Minsky Financially Driven Basic Cycle and Super-cyclementioning

confidence: 99%

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Time scales and mechanisms of economic cycles: a review of theories of long waves

Bernard¹,

Gevorkyan²,

Palley³

et al. 2014

ROKE

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This paper explores long wave theory, including Kondratieff's theory of cycles in production and relative prices; Kuznets' theory of cycles arising from infrastructure investments; Schumpeter`s theory of cycles due to waves of technological innovation; Goodwin`s theory of cyclical growth based on employment and wage share dynamics; Keynes-Kaldor-Kalecki demand and investment oriented theories of cycles; and Minsky's financial instability hypothesis whereby capitalist economies show a genetic propensity to boom-bust cycles. This literature has been out of favor for many years but recent developments suggest a reexamination is warranted and timely.

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Section: The Minsky Financially Driven Basic Cycle and Super-cyclementioning

confidence: 99%

Section: The Minsky Financially Driven Basic Cycle and Super-cyclementioning

confidence: 99%

Time scales and mechanisms of economic cycles: a review of theories of long waves

Bernard¹,

Gevorkyan²,

Palley³

et al. 2014

ROKE

Self Cite

View full text Add to dashboard Cite

show abstract

“…Minsky's account of the ups and downs of financial conditions and the economy has remained relatively obscure. It has not been formally modelled apart from work by Keen (1995Keen ( , 2013, Vercelli (2009), Ryoo (2010), Palley (2011), Bhattacharya et al (2015).…”

Section: Introductionmentioning

confidence: 99%

Towards a financial cycle for the U.S., 1973–2014

Rozite

Bezemer

Jacobs

2019

The North American Journal of Economics and Finance

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We suggest a new approach to estimating financial cycles, as interactions of real-sector and financial-sector sentiments. We apply this to the U.S. financial indicators over 1973-2014. Based on financial cycle concepts of Schumpeter and Minsky, we motivate the selection of six indicators which capture finance-real sector linkages: the slope of the yield curve, a Purchasing Managers' Index, real estate price returns, the S&P stock price index and leverage ratios of households and non-financial corporations. We estimate lead-lag relations and apply principal component analysis on aligned series to construct factors. We find that two factors, capturing corporate and household sentiments, account for over 60% of the cumulative variance in our data. Corporate optimism peaks before crisis episodes while households' sentiment is more persistent and follows with a lag corporate semtiment.

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“…In their data-driven study of eight centuries of financial instability, spanning over 60 countries and pointing to a breathtaking variety of financial crises ranging from banking collapses to hyperinflation to government debt defaults to currency collapses and beyond, Carmen Reinhardt and Kenneth Rogoff 6. Tom Palley (2009) has characterized this notion of a supra-cyclical build-up of leverage, risk-taking, and fragility in terms of dangerously unsustainable financing positions as Minsky's 'Super-Cycle. ' (2009) point to a recurrent pattern of amnesia, euphoria, and hubris which prompt economic actors to engage in excessive risk-taking and so expose themselves eventually to untenable levels of indebtedness to the point of self-destruction.…”

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confidence: 99%

The heterodox notion of structural crisis

Guttmann

2015

Review of Keynesian Economics

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International audienceLong waves of economic activity, also known as ‘Kondratiev cycles,’ have been known to exist for nearly a century without having ever been given a proper theoretical context. In this paper we try to identify various contributions to shed light on this phenomenon, notably Schumpeter's notion of technological bursts and Minsky's notion of a super-cycle where ‘stability breeds instability’ to the point of systemic crisis. A more comprehensive and methodologically innovative approach to the periodization of capitalism is the French Régulation School. This heterodox approach has reframed the story of long waves in terms of period-specific ‘accumulation regimes’ and ‘modes of (self-)regulation.’ Here systemic crises, like the ones we experienced in 1873–1879, 1929–1939, 1973–1982 or 2007–2011, play the role of regime-transforming adjustments in the institutional make-up of the wage relation, forms of competition, state intervention, and money and banking, as well as international context. We apply the Regulationist approach to finance-led capitalism, the latest long-wave accumulation regime emerging around 1982 to find itself confronted with its own systemic crisis starting in 2007. How will that crisis, one of the most profound structural crises to date, change our economic system

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A Theory of Minsky Super-cycles and Financial Crises

Cited by 16 publications

References 19 publications

Time scales and mechanisms of economic cycles: a review of theories of long waves

Time scales and mechanisms of economic cycles: a review of theories of long waves

Towards a financial cycle for the U.S., 1973–2014

The heterodox notion of structural crisis

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