Financial Crises and Crashes

This course consists of four lectures, aimed at masters and upper-undergraduate students, for the Easter program at Oriel College. From their onset to their amplification and, finally, the policies that lead to their resolution, this course covers the history and economic theories of financial crises and market crashes, drawing from academic literature as well as testimonies and insights from practitioners.

1. A brief history of financial crises

• Brunnermeier, M. K. 2009. “Deciphering the Liquidity and Credit Crunch 2007-2008.” Journal of Economic Perspectives 23, no. 1: 77–100.
• Allen, F., and D. Gale. 2009. Chapter One in Understanding Financial Crises. Oxford University Press.

2. That escalated quickly: crisis transmission channels

• Geanakoplos, J. 2009. “The Leverage Cycle.” NBER Macroeconomics Annual 24: 1–65.
• Jorion, P. 2000. “Risk Management Lessons from Long Term Capital Management.” European Financial Management 6, no. 3: 277–300.
• Acemoglu, D., A. Ozdaglar and A. Tahbaz-Salehi. 2013. “Systemic Risk and Stability in Financial Networks.” National Bureau of Economic Research Working Paper no. 18727.

3. The behavioral origins of financial crises

• Schiller, R. 2003. “From Efficient Markets Theory to Behavioral Finance.” Journal of Economic Perspectives 17, no. 1: 83-104.
• Barberis, N. 2011. “Psychology and the Financial Crisis of 2007-2008.” Yale School of Management, August 2011.

4. Walking through fire: policy in times of crisis

• Bernanke, B. S. 2009. “The Crisis and the Policy Response.” Stamp Lecture, London School of Economics, January 13, 2009.
• Kohn, D. L. 2010. “The Federal Reserve’s Policy Actions During the Financial Crisis and Lessons for the Future.” Carleton University, May 13, 2010.
• Swagel, P. 2015. “Legal, Political, and Institutional Constraints on the Financial Crisis Policy Response.” Journal of Economic Perspectives 29, no. 2: 107-22.
• Caballero, R. J. 2010. “Sudden Financial Arrest.” IMF Economic Review 58, no. 1: 6-36.
• Hanson, S. G., A. K. Kashyap and J. C. Stein. 2011. “A Macroprudential Approach to Financial Regulation.” Journal of Economic Perspectives 25, no. 1: 3-28.
• Blanchard, O., G. Dell’Ariccia and P. Mauro. 2010. “Rethinking Macroeconomic Policy.” Journal of Money, Credit and Banking 42, no. 1: 199-215.