Hyman P. Minsky

Distinguished Scholar

Financial economist Hyman P. Minsky was a Levy Institute distinguished scholar from 1990 until his death in 1996. He was responsible for establishing two of the Institute's ongoing research programs: Monetary Policy and Financial Structure, and The State of the U.S. and World Economies.

Minsky was born in Chicago in 1919 and studied at the University of Chicago and Harvard University. At Harvard he served as a teaching assistant to Alvin Hansen, one of the leading disciples of John Maynard Keynes in the United States. Minsky went on to teach at Carnegie Tech (now Carnegie Mellon University) and Brown University, and from 1957 to 1965 was an associate professor of economics at the University of California, Berkeley. It was at Berkeley that he developed his major theories about lending and economic activity, views he laid out in the books John Maynard Keynes (1975) and Stabilizing an Unstable Economy (1986). From 1965 until his retirement in 1990, Minsky was professor of economics at Washington University in St. Louis.

Although he considered himself a Keynesian, Minsky was uncomfortable with the way most mainstream economists interpreted Keynes. He rejected conventional economic ideas such as the efficient market hypothesis in favor of what he called the financial instability hypothesis. Minsky held that, over a prolonged period of prosperity, investors take on more and more risk, until lending exceeds what borrowers can pay off from their incoming revenues. When overindebted investors are forced to sell even their less-speculative positions to make good on their loans, markets spiral lower and create a severe demand for cash—an event that has come to be known as a "Minsky moment."

Minsky was the author of four major books and a contributor to several others, and he published extensively in academic journals. His writings include:

  • Poverty: The Aggregate Demand Solution and Other Non-welfare Approaches, 1965;
  • "A Theory of Systemic Fragility," in E. Altman and A. Sametz, eds., Financial Crises, 1977;
  • Can "It" Happen Again? Essays on Instability and Finance, 1982;
  • "Debt and Business Cycles" (with M. D. Vaughan), Business Economics, July 1990; and
  • "The Financial Instability Hypothesis," in P. Arestis and M. Sawyer, eds., Handbook of Radical Political Economy, 1993.

Minsky held a B.S. in mathematics from the University of Chicago (1941) and an M.P.A. (1947) and a Ph.D. in economics (1954) from Harvard. He was a recipient in 1996 of the Veblen-Commons Award, given by the Association for Evolutionary Economics in recognition of his exemplary standards of scholarship, teaching, public service, and research in the field of evolutionary institutional economics.

In 2010, Minsky’s papers were catalogued and made available for research. Housed at the Levy Institute, the papers comprise writings, correspondence, notes, and ephemera, much of it centered on understanding and explaining financial crises. Minsky’s late writings are also available in electronic form through the Bard Digital Commons.

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