Minsky Moments, Russell Chickens, And Gray Swans: The Methodological Puzzles Of The Financial Instability Analysis

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Executive Summary

The recent revival of Hyman P. Minsky's ideas among policymakers, economists, bankers, financial institutions, and the mass media, synchronized with the increasing gravity of the subprime financial crisis, demands a reappraisal of the meaning and scope of the "Financial Instability Hypothesis" (FIH). The authors argue that they need a broader approach than that conventionally pursued, in order to understand not only financial crises but also the periods of financial calm between them and the transition from stability to instability.

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