Stabilising an Unstable Economy
A classic from a very different school of economics than Taylor, Minsky's book is a treasure trove of financial history and maverick economic thinking. From his central theses, I ultimately disagree with the behaviourist one. It is sadly not spelled out as clearly as the others but basically holds that banks get too optimistic in boom periods which, as I describe in my book, isn't necessarily true. His other key insight about the role of governments and a lender of last resort, however, is spot on. Minsky sees bail-outs of banks as a legitimate choice if governments deal with the resulting inflationary pressure and the areas of risk taking that caused the crisis. Both are highly relevant today where countries compete in printing money but waste their focus for regulatory reform in dead ends (with the acquiescence of banks which much prefer regulators to stay in their ivory tower and think about "macro-prudential regulation" and "systemic interconnectedness" rather than really doing their job in being intrusive and stopping banks from doing lots of things). We have all learned to compare the current crisis with the Japanese or Swedish experience in the 1990s but Minsky's excellent empirical findings raise the question if we should not be equally concerned about the UK and US banking crises in the 1970s and early 1980s.
Buy Stabilizing an Unstable Economy from the GI Bookshop