Behavioral Finance Lecture 10: Minsky’s Financial Instability Hypothesis

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In the first half of this lec­ture, I dis­cuss the econ­o­mists who influ­enced Minsky–Marx, Fish­er, Schum­peter and Keynes–as a pre­lude to out­lin­ing Min­sky’s Finan­cial Insta­bil­i­ty Hypoth­e­sis. (PPT File: Debt­watch Sub­scribers; CfE­SI Mem­bers).

In the lec­ture I inad­ver­tent­ly slan­dered Eugene McCarthy while explain­ing the McCarthy­ist “Com­mu­nist Witch Hunt” days in the USA to my stu­dents. It would have been career sui­cide for Min­sky to acknowl­edge that he had read Marx by cit­ing him in an aca­d­e­m­ic paper. I meant Joe McCarthy of course.

Hav­ing out­lined Min­sky’s Finan­cial Insta­bil­i­ty Hypoth­e­sis, I explain the math­e­mat­i­cal mod­el I devel­oped of it, on the foun­da­tion of Richard Good­win’s “Growth Cycle” mod­el of cap­i­tal­ism.  (PPT File: Debt­watch Sub­scribers; CfE­SI Mem­bers)