Financial Fragility and Central Bank: Are Minsky's Crisis and Austrian Business Cycle are Complementary?

Authors

  • François Facchini Faculty Jean Monnet, University of Paris Sud (RITM), University Pais-Saclay, 54 Boulevard Desgranges, B.P. 104, 92331 Sceaux Cedex & associate to Centre d'Economie de la Sorbonne University of Paris 1

DOI:

https://doi.org/10.6000/1929-7092.2015.04.21

Keywords:

Economic crisis, Minsky, central bank, capitalism by fiat and financial instability

Abstract

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.

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Published

2015-12-14

Issue

Section

Special Issue - Hayek, Keynes and the Crisis: Analyses and Remedies. An Introduction