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Open Access Publications from the University of California

Hegemonic Stability Theory and Economic Analysis: Reflections on Financial Instability and the Need for an International Lender of Last Resort

  • Author(s): Eichengreen, Barry
  • et al.

Eichengreen argues that recent developments in financial theory provide rigorous microeconomic foundations for the fragile, volatile and crisis-prone forms of market behavior identified in Charles Kindleberger’s Manias, Panics and Crashes and invoked in The World in Depression as an explanation for interwar events. It is incorrect to assert, as is often done, that economic theory in the form of the efficient-markets hypothesis provides no basis for such concerns.

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