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Minsky and dynamic macroprudential regulation

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  • Jan Kregel

Abstract

In the context of current debates about the proper form of prudential regulation and proposals for the imposition of liquidity and capital ratios, the paper examines Hyman Minsky’s work as a consultant to government agencies exploring financial regulatory reform in the 1960s. As the author explains, this often-overlooked early work, a precursor to Minsky’s “financial instability hypothesis†, serves as yet another useful guide to explaining why regulation and supervision in the lead-up to the 2008 financial crisis were flawed, and why the approach to reregulation after the crisis has been incomplete.

Suggested Citation

  • Jan Kregel, 2014. "Minsky and dynamic macroprudential regulation," PSL Quarterly Review, Economia civile, vol. 67(269), pages 217-238.
    • Handle: RePEc:psl:pslqrr:2014:24
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    References listed on IDEAS

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    1. Persaud, Avinash, 2009. "Macro-Prudential Regulation," ECMI Papers 1712, Centre for European Policy Studies.
    2. Claudia Campbell & Hyman Minsky, 1987. "How to get off the back of a tiger, or, do initial conditions constrain deposit insurance reform?," Proceedings 158, Federal Reserve Bank of Chicago.
    3. James Tobin, 1987. "A Case for Preserving Regulatory Distinctions," Challenge, Taylor & Francis Journals, vol. 30(5), pages 10-17, September.
    4. Avinash Persaud, 2009. "Macro-Prudential Regulation," World Bank Publications - Reports 10243, The World Bank Group.
    5. Ronnie J. Phillips, 1997. "Rethinking Bank Examinations: A Minsky Approach," Journal of Economic Issues, Taylor & Francis Journals, vol. 31(2), pages 509-516, June.
    6. Ronnie J. Phillips, "undated". "Narrow Banking Reconsidered, The Functional Approach to Financial Reform," Economics Public Policy Brief Archive ppb_17, Levy Economics Institute.
    7. Henry C. Simons, 1936. "Rules versus Authorities in Monetary Policy," Journal of Political Economy, University of Chicago Press, vol. 44(1), pages 1-1.
    8. Mario Tonveronachi, 2013. "De-globalising bank regulation," PSL Quarterly Review, Economia civile, vol. 66(267), pages 371-385.
    9. Jan Kregel, 2012. "Minsky and the Narrow Banking Proposal: No Solution for Financial Reform," Economics Public Policy Brief Archive ppb_125, Levy Economics Institute.
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    Cited by:

    1. Sheila Dow, 2019. "Monetary Reform, Central Banks, and Digital Currencies," International Journal of Political Economy, Taylor & Francis Journals, vol. 48(2), pages 153-173, April.
    2. Espinosa-Torres, Juan Andrés & Gomez-Gonzalez, Jose Eduardo & Melo-Velandia, Luis Fernando & Moreno-Gutiérrez, José Fernando, 2016. "The international transmission of risk: Causal relations among developed and emerging countries’ term premia," Research in International Business and Finance, Elsevier, vol. 37(C), pages 646-654.
    3. Egert Juuse & Rainer Kattel, 2014. "Financial Regulation in Estonia," Working papers wpaper57, Financialisation, Economy, Society & Sustainable Development (FESSUD) Project.
    4. Sheila Dow, 2020. "Alfred Marshall, Evolutionary Economics and Climate Change: Raffaelli Lecture," Department Discussion Papers 2001, Department of Economics, University of Victoria.
    5. Klapkiv Lyubov & Ulgen Faruk, 2022. "An Evolutionary Perspective on the Endogenous Instability of Capitalist Dynamics," Central European Economic Journal, Sciendo, vol. 9(56), pages 291-308, January.
    6. Sofoklis Vogiazas & Constantinos Alexiou, 2019. "Bitcoin: The Road to Hell Is Paved With Good Promises," Economic Notes, Banca Monte dei Paschi di Siena SpA, vol. 48(1), February.
    7. Felipe Rezende, 2015. "Why does Brazil’s banking sector need public banks? What should BNDES do?," PSL Quarterly Review, Economia civile, vol. 68(274), pages 239-275.
    8. Esteban Ramon Perez Caldentey & Lorenzo Nalin & Leonardo Rojas, 2022. "A baseline stock-flow model for the analysis of macroprudential regulation for Latin America and the Caribbean," Working Papers PKWP2217, Post Keynesian Economics Society (PKES).
    9. Egert Juuse & Rainer Kattel, 2015. "Implications of the Transformation of the State-Owned Banking System into System of Foreign-Owned Banks in New Member States for Macroeconomic and Financial Stability," Working papers wpaper103, Financialisation, Economy, Society & Sustainable Development (FESSUD) Project.
    10. Elisabetta Montanaro, 2023. "La vigilanza bancaria. Storia, teorie, prospettive di Lorenzo Esposito e Giuseppe Mastromatteo: un articolo di recensione (La vigilanza bancaria. Storia, teorie, prospettive by Lorenzo Esposito and Gi," Moneta e Credito, Economia civile, vol. 76(302), pages 133-153.
    11. Sheila Dow & Guðrún Johnsen & Alberto Montagnoli, 2015. "A critique of full reserve banking," Working Papers 2015008, The University of Sheffield, Department of Economics.

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    More about this item

    Keywords

    Banking supervision; Macroprudential Regulation; Financial instability hypothesis (FIH);
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G01 - Financial Economics - - General - - - Financial Crises
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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