Any economy can be seen as consisting of two different spheres, the financial/monetary economy and the ‘real economy’ of production and distribution of goods and services. This section covers the financial aspects of economic growth and development and the synchronization of the financial and the real economies: The role of a financial sector and a financial policy as necessary scaffolding supporting the real economy and financing innovations. Financial theory of growth and development is presented, as well as the role of financial institutions, central banks, and the Bretton Woods Institutions. Keynesian theory and the mechanisms causing financial fragility and financial crises, like the Asian Crisis at the end of 20th century and the global financial crisis exploded in 2008, are explained.
Jan Kregel and Leonardo Burlamaqui, Finance, Competition, Instability, and Development Microfoundations and Financial Scaffolding of the Economy, The Other Canon Foundation, 2000.
Hyman P. Minsky and Charles J. Whalen, Economic Insecurity and the
Institutional Prerequisites for Successful Capitalism, The Levy Economics Institute of Bard College Working Paper No. 165, May 1996.
Hyman P. Minsky, The Capital Development of the Economy
and The Structure of Financial Institutions, The Levy Economics Institute of Bard College Working Paper No. 72, January 1992.