A Comment on Dickens

Abstract

There are two separate, but related aspects to Edwin Dickens' paper. One concerns a specific historical event: what caused the financial crisis of 1966? The second draws out the implications of this case for the general theory of financial instability developed most notably by Hyman Minsky and applied by Martin Wolfson to the 1966 financial crisis. Dickens' study is fascinating, both for the detailed, - indeed, almost blow by blow - description of the unfolding action, and also for the unique theoretical interpretation he brings to the events. This paper has made me think in new ways about issues such as the etiology of financial crises, and the interactions between private interests and the Federal Reserve. One of the many things I very much liked about this paper was Dickens' method of using very detailed historical analysis of a specific event, discussed with detailed knowledge of the financial institutions and markets of the time, which he then placed in a broader context of historical events all in the process of shedding light on an important theoretical issue in macroeconomics. While Dickens' theoretical and historical analyses are very impressive, the empirical evidence for Dickens' assertions could be stronger.