How Minsky viewed Keynesian economics

Minsky himself rejected the label of post-Keynesian on his work, but there is no doubt that the foundations of his work are straight from Keynes.

With interest renewed by the global financial crisis in the ideas of Hyman Minsky, we may ask: What would Minsky tell his fellow economists working in macroeconomics?

The answer would seem to be something along the following. Analysis (theory and empirical work) devoid of institutions “throws no appreciable light” on real world economies. Macro models have to be institution-specific, with an emphasis on financial institutions.

Of course, he recognized that financial institutions evolve over time, being an object of much innovation. Thus, macro models that are institution-specific cannot be easily “embedded,” since the institutional environment is fluid.

To appreciate the Minsky approach, see the paper by Papadimitriou and Wray (1997).


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