Question

Real Business Cycle theory and the financial instability hypothesis of Hyman Minsky represent two distinct schools of thought regarding the causes of recessions. What are the major differences between the two theories of recessions and what are their implications for real estate investors?

Answer 1

Answer: As per my knowledge, Minsky's interpretation of Keynes's macroeconomics and essential message clashes with authoritative alternative interpretations, it has become increasingly influential during the years following the Global Financial Crisis, even in mainstream circles.

*Although some of the similarities and/or analogies between Minsky's approach and that of the Austrian School suggest a more than merely superficial affinity between the two theoretical frameworks and although some scope for cross-fertilization between both approaches can be found, both theoretically and empirically, at a fundamental conceptual level both theories remain incompatible and difficult if not impossible to reconcile, in particular in terms of fundamental causality and in terms of policy conclusions and prescriptions.

Minsky’s reform proposals are multifaceted and somewhat eclectic. In thefinancial sphere he was in favor of smaller banks; in order to support decen-tralization and a return to more relationship-oriented banking he proposed thecreation of a system of community development banks. reform proposals are multifaceted and somewhat eclectic. In the

financial sphere he was in favor of smaller banks; in order to support decen-

tralization and a return to more relationship-oriented banking he proposed the

creation of a system of community development banks. reform proposals are multifaceted and somewhat eclectic. In the

financial sphere he was in favor of smaller banks; in order to support decen-

tralization and a return to more relationship-oriented banking he proposed the

creation of a system of community development banks. reform proposals are multifaceted and somewhat eclectic. In the

financial sphere he was in favor of smaller banks; in order to support decen-

tralization and a return to more relationship-oriented banking he proposed the

creation of a system of community development banks. reform proposals are multifaceted and somewhat eclectic. In the

financial sphere he was in favor of smaller banks; in order to support decen-

tralization and a return to more relationship-oriented banking he proposed the

creation of a system of community development banks. reform proposals are multifaceted and somewhat eclectic. In the

financial sphere he was in favor of smaller banks; in order to support decen-

tralization and a return to more relationship-oriented banking he proposed the

creation of a system of community development banks.

*Despite the fact that Minsky's policy conclusions are multifaceted and somewhat eclectic, they manifest a lack of familiarity with the conclusions of the Austrian analysis of the problems of central planning by Big Players such as Big Bank and Big Government. Both approaches also offer contrasting interpretations of the historical experience of the Global Financial Crisis.....