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dc.contributor.authorCrotty, Jamesen_US
dc.date.accessioned2011-06-10en_US
dc.date.accessioned2012-09-25T07:19:19Z-
dc.date.available2012-09-25T07:19:19Z-
dc.date.issued2011en_US
dc.identifier.urihttp://hdl.handle.net/10419/64225-
dc.description.abstractThe radical deregulation of financial markets after the 1970s was a precondition for the explosion in size, complexity, volatility and degree of global integration of financial markets in the past three decades. It therefore contributed to the severity and breadth of the recent global financial crisis. It is not likely that deregulation would have been so extreme and the crisis so threatening had most financial economists adopted Keynes-Minsky financial market theory, which concludes that unregulated financial markets reinherently unstable and dangerous. Instead, they argued that neoclassical efficient financial market theories demonstrate that lightly regulated generate optimal security prices and risk levels, and prevent booms and crashes. Efficient market theory became dominant in spite of the fact that it is a fairly-tale theory based on crudely unrealistic assumptions. It could only have been adopted by a profession committed to Milton Friedman's fundamentally flawed positivist methodology, which asserts that the realism of assumptions has no bearing on the validity of a theory. Keynes argued persuasively that only realistic assumptions can generate realistic theories. Keynes-Minsky theory, which is derived from a realistic assumption set, should be the profession's guide to regulation policy.en_US
dc.language.isoengen_US
dc.publisherUniv. of Massachusetts, Dep. of Economics Amherst, Mass.en_US
dc.relation.ispartofseriesWorking Paper, University of Massachusetts, Department of Economics 2011-05en_US
dc.subject.jelB41en_US
dc.subject.jelB5en_US
dc.subject.jelG10en_US
dc.subject.jelG11en_US
dc.subject.jelG12en_US
dc.subject.ddc330en_US
dc.subject.keywordefficient financial market theoryen_US
dc.subject.keywordKeynes-Minsky financial theoryen_US
dc.subject.keywordFriedman's positivismen_US
dc.subject.keywordfinancial regulationen_US
dc.subject.keywordfinancial crisesen_US
dc.titleThe realism of assumptions does matter: Why Keynes-Minsky theory must replace efficient market theory as the guide to financial regulation policyen_US
dc.typeWorking Paperen_US
dc.identifier.ppn661917010en_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungenen_US
Appears in Collections:Working Papers, Department of Economics, University of Massachusetts

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