Re: Minsky, FIH, and stability

[FAC_BROSSER@xxxxxxxxxxxxxxxx]

Response to Paul Davidson on Germany and Japan:
     I shall not dispute that mistaken expectations played a
role in the difficulties in both Germany and Japan.  The serious
coordination failure in Germany appears to me to have been that
of monetary policy between the EC (or is it EU now?) members.  The
"artificial exchange rate" aggravated but did not cause the collapse
problem in the GDR as the fact that output also fell in Poland which
did devalue its zloty shows.  The general collapse of the CMEA trade bloc
is important here, but I would suggest that the events in East-Central
Europe are a challenge to ALL economic theories.  We do not really
understand what happened, although I do not think the German situation
involves much nonlinearity, at least not like the Japanese case.  I
also note that some observers claim that the East Germans wanted equal
nominal wages and that if there had not been the equal exchange rate
the push for that would have been dragged out over a longer time
thereby creating even more uncertainties and difficulties of adjustment.
     I also do not dispute that the crash of a speculative bubble in
both stocks and real estate in Japan has aggravated the slowdown, but
I do not see it as the main cause, rather more an effect.  Have you
become a Minskyite after all, Paul?
     More generally when we get to analyzing real economies, I support
an open-minded eclectic approach that takes into account the historical
and institutional idiosyncracies of the economy under examination.  There
is no general, universally applicable "one size fits all" theory, that
explains everything in every economy, although there may be readers of
this who would dispute this.  So there, having defended "esoteric goop"
models, now I reveal myself as a closet institutionalist!
Barkley Rosser
James Madison University
PS:  Have a historically and institutionally correct day!
PPS:  Anyone on this net interested in perusing first drafts of chapters
from the book by me and my wife, please let me know.  Besides several
on general discussions of systems, we have completed ones on Iran,
Japan, France, Sweden, Germany, Poland, Yugoslavia, and the Koreas.  Still
to come are the Former Soviet Union, Hungary, Mexico, and China.
My e-mail address is fac_brosser@xxxxxxxxxxxxxxxx