Acta Oeconomica Pragensia 2012, 20(6):18-33 | DOI: 10.18267/j.aop.385

Financial Innovations and Economic Fluctuation from the Present Perspective

Martin Janíčko
Vysoká škola ekonomická v Praze, Národohospodářská fakulta (martin.janicko@vse.cz). Pracovní verze článku byla publikována v rámci sborníku navazujícího na konferenci VŠMIE s názvem Úloha inovací v hospodářském cyklu, pořádanou v září 2010.

Financial innovations should be regarded as a substantial element in the functioning of modern economies and financial sectors. However, their general impact is to be assessed from the present perspective, essentially depending on their particular behaviour and the role they play in the economy. Most importantly, this text follows both the Post-Keynesian and the Regulation School logic, trying to clarify business cycle volatility with respect to the intensity of innovative activities in the financial sector. The article also discusses some hypothetical causal relationships between the 2007-2008 financial and economic crisis and financial innovation activities, largely accelerated in intensity over the preceding two decades. As it is clearly demonstrated, the "Great Moderation" argument has not been entirely confirmed and a number of mainstream economists have ultimately been forced to adjust their respective approaches towards the functioning of modern economies.

Keywords: financial innovations, business cycle amplitude, Post-Keynesian economics, Regulation School
JEL classification: E32, E44, G01, G28

Published: October 1, 2012  Show citation

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Janíčko, M. (2012). Financial Innovations and Economic Fluctuation from the Present Perspective. Acta Oeconomica Pragensia, 20(6), 18-33. doi: 10.18267/j.aop.385
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