Unhappy families are all alike: Minskyan cycles, Kaldorian growth, and the Eurozone peripheral crises

Abstract

It is frequently claimed that the economic and financial crises in the Eurozone peripheral countries depend on different, country-specific causes. In one case the crisis would depend on a real estate bubble (Ireland, Spain), in another on deceitful government manipulating the national accounts (Greece), in still another on corrupted government postponing essential reforms (Italy). While these claims can always be supported by anecdotal evidence, one may wonder whether a unified framework exists that provides a more consistent explanation of the most massive failure in macroeconomic management since 1929. In this paper we try to interpret the Eurozone peripheral crises in the light of the Minskyan cycle theory, and in particular of its recent applications to developing countries crises. A closer look at the pattern of the macroeconomic fundamentals shows that the different Eurozone crises are actually consistent with this unified framework, thereby providing some important lessons to European policy makers.

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