Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/298319 
Authors: 
Year of Publication: 
2023
Series/Report no.: 
NBB Working Paper No. 436
Publisher: 
National Bank of Belgium, Brussels
Abstract: 
In this paper the vision of the "Young" and "Elder" Lamfalussy on the origins of instability in capitalist economies will be contrasted. The young Lamfalussy found the origins of instability in medium-term cumulative processes in the real sector of the economy, very much inspired by the vicious circles in the British and Belgian economies in the postwar period, in contrast to the virtuous growth processes of the German and Italian economies. The Elder Lamfalussy focused on financial innovations and the short-term myopic behavior of financial markets, very much inspired by his experience of the Latin American debt build-up and ensuing crisis in the early 1980s. The Euro area crisis showed the importance of both processes, as it was the consequence of both short-term myopic behavior in financial markets and medium-term cumulative processes in the real sector.
Subjects: 
Lamfalussy
economic instability
economic cycles
financial innovations
Latin American debt crisis
Euro area crisis
JEL: 
A11
B22
B32
E3
E 60
F02
G10
N10
Document Type: 
Working Paper

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