Econ 313, Assigned Readings


Ben Bernanke gave an excellent set of 4 lectures in 2012 discussing the history of the Federal Reserve, and more relevant to this class, its response to the recent crisis. I recommend that you watch them at some point in the semester. He also provides a reading list that you may find interesting.

The Basics of the Housing Bubble

Economist John Taylor blames policy makers (including the Fed) for the Great Recession in the American Economic Review.

Taylor, John. 2014. “The Role of Policy in the Great Recession and the Weak Recovery.” The American Economic Review, 104(5): 61-66.

Here is a 2008 Washington Post article on the housing boom and bust.

Klein, Alec and Zachary Goldfarb, 6/15/08. “The Bubble:  How Homeowners, Speculators, and Wall Street Dealmakers Rode a Wave of Easy Money with Crippling Consequences.” Washington Post.

This 2008 article from The Telegraph paints an interesting picture of the subprime crisis as it was gaining steam. It also illustrates how the crises also affected the UK.

Conway, Edmund. March 3, 2008. “Ninja’ loans explode on sub-prime frontline.” The Telegraph

This paper from the Economic Journal is a more academic source. It shows that lenders in areas with rapidly rising housing prices responded by lowering their standards. I encourage you to give it a shot. While the bulk of the paper will probably give you trouble (e.g. the econometric sections), the introduction nicely summarizes the authors’ findings.

Duca, J., Muellbauer, J., and A. Murphy. 2011. “House Prices and Credit Constraints: Making Sense of the US Experience.” Economic Journal, Vol. 121 (552): 533-551.

Speculative Bubbles

Robert Shiller has a New York Times op/ed piece on information cascades:

Shiller, Robert. 3/2/08. “How a Bubble Stayed Under the Radar,” New York Times

Mark Thoma has a somewhat technical blog entry that discusses the relationship between lower interest rates and home prices.

This paper from the New York Fed from 2004 considers the issue of whether there was a housing bubble. It ultimately concludes that there was no bubble. Keep in mind that 1) the authors didn’t have the benefit of hindsight, and 2) it was written prior to the peak of the bubble.

McCarthy, J. and R. Peach. 2004. “Are Home Prices the Next Bubble.” Federal Reserve Bank of New York Economic Policy Review, 10(3): 1-17.

Here are some lecture notes from Peter Ireland on the asset pricing model. There are a few differences from the model presented in class, namely he ignores expectations and assumes a constant interest rate.

The Role of Policy in the Housing Bubble

This op/ed from the New York Times discusses some of the issues with winding Fannie and Freddie down.

McLean, Bethany. July 20, 2015. “Fannie and Freddie are Back, Bigger and Badder Than Ever” New York Times.

This paper from the San Fran Fed describes the Fed’s policy in response to the recession and during the housing bubble.

Rudebusch, Glenn. 2009. “The Fed’s Monetary Policy Response to the Current Crisis.” Federal Reserve Bank of San Francisco Economic Letter, 2009-17.

An article by James Hamilton’s blog on the role of Fannie Mae and Freddie Mac. Here is a followup that provides some additional opinions.

Hamilton, James. 7/14/08. “Fannie Mae and Freddie Mac

Hamilton, James. 7/15/08. “Did Fannie and Freddie cause the mortgage crisis?” adequately

Here is an academic paper quantifying the positive externality from homeownership.

DiPasquale, D. and E,. Glaeser. 1999. “Incentives and Social Capital: Are Homeowners Better Citizens?” Journal of Urban Economics, Vol. 45: 354-384.

Here is a less technical piece from Denise DiPasquale that addresses many of the same issues as the last paper.

DiPasquale, D. 2011.“Rental Housing: Current Market Conditions and the Role of Federal Policy.” Cityscape: A Journal of Policy Development and Research, Vol. 13(2).

A blog post by Mark Thoma discussing the complicated issue of assigning blame to the GSEs.

James Kwak blames the Fed for the housing bubble in this short post.

Kwak, James. 3/16/09. “He Blames Greenspan,” posted at

Historical Relationship Between Housing and the Business Cycle (not covered in class for FALL 2020)

Class will follow this paper by Edward Leamer. It is long and parts of it are technical. But you should be able to follow its main points.

Leamer, Edward. 2007. “Housing is the Business Cycle.” Proceedings, Federal Reserve Bank of Kansas City, 149-233.

Here is Frank Smet’s reply.

Smets, Frank. “Commentary: Housing is the Business Cycle.” Proceedings, Federal Reserve Bank of Kansas City, 235-242.

Here is some additional commentary.

“General Discussion: Housing is the Business Cycle.” Session chaired by Issing, O.  Proceedings, Federal Reserve Bank of Kansas City, 245-251.

Mortgage Backed Securities

James Vickery has a good article on the role of the credit rating agencies.

Vickery, James. 2/15/12. “The Dodd-Frank Act’s Potential Effects on the Credit Rating Industry.” Federal Reserve of New York’s Liberty Street Economics.

Paul Krugman discusses the rating agencies in this blog post.

Krugman, P. April 25, 2010. “Berating the Raters.” New York Times

This article, written shortly before housing’s collapse, describes the rise of private label mortgage backed securities. Enjoy the many examples of people saying things that appear monumentally stupid in hindsight.

England, Robert. 2006. “The Rise of Private Label.” From

This academic article finds empirical evidence that the rating agencies inflated their grades on securities issued by large issuers.

He, J., Qian J., and P. Strahan, 2011. “Credit Ratings and the Evolution of the Mortgage-Backed Securities Market.” American Economic Review, Papers and Proceedings,  Vol. 101:3, 131–135.

Michael Lewis (author of Moneyball) wrote a very popular book, The Big Short, that chronicles the role of mortgage backed securities, credit ratings agencies, etc. in the run up to the financial panic. Here is a link to its Amazon page.

Credit Cycles

This would be a good time to watch the Bernanke lectures posted at the top of this page.

Here is Fisher’s own summary of debt-deflation.

Fisher, Irving. 1933. “The Debt-Deflation Theory of Great Depressions.” Econometrica, Vol. 1(4): 337-357.

Bernanke gave this speech in 1994. It outlines his explanation of the Great Depression and shed slight on the Fed’s policy response to the Great Recession.

Bernanke, Ben. 1994. “The Macroeconomics of the Great Depression: A Comparative Approach.” NBER Working Paper 4814.

The Financial Panic of 2008

I encourage you to watch the documentary Inside Job by Craig Ferguson and narrated by Matt Damon. Ben Affleck does NOT appear as a sidekick.

This paper is a brief summary of the financial crisis by Gary Gorton and Andrew Metrick.

Gorton, Gary, and Andrew Metrick. 2012. “Getting Up to Speed on the Financial Crisis: A One-Weekend-Reader’s Guide.” Journal of Economic Literature, 50(1): 128-50.

Here is an older summary by Paul Mizen.

Mizen, Paul. 2008. “The Credit Crunch of 2007-2008: A Discussion of the Background, Market Reaction, and Policy Responses.” Federal Reserve Bank of St. Louis Review, 90(5), 531-67.

Here is Hank Paulson’s take on the financial crisis:

Paulson, Hank. September 12, 2013. “Hank Paulson: This is What it Was Like to Face the Financial Crisis.” Businessweek

Here is an article on Bear Stearn’s collapse.

Boyd, Roddy. 3/31/08. “The Last Days of Bear Stearns.” Fortune.

An Economist article on Lehman’s collapse.

9/10/09. “If Lehman had not Failed, would the crisis have happened anyway?” The Economist

An ABC article on the collapse of Lehman Brothers.

Jaffee, Matthew. 9/14/09. “Lessons to Be Learned One Year After Lehman Brothers Collapse Roiled the World” ABC News

Monetary Economics: Theory and Evidence

You may wish to review the related section of your Intermediate Macroeconomics textbook.

Here is the University of Chicago’s survey of economists regarding the gold standard.

The main econometric results follow this paper. It is quite technical:

Lawrence J. Christiano, Martin Eichenbaum and Charles L. Evans. 1999. “Monetary Policy Shocks: What Have We Learned and to What End?”, in J.B. Taylor and M. Woodford (eds), Handbook of Macroeconomics 1A, Elsevier Science, Amsterdam, 65-148

Conventional Monetary Policy

Here is the December 2012 FOMC statement.

Here is the September 2012 FOMC statement.

John Williams, then President of the Federal Reserve Bank of San Francisco (now he is President of the New York Fed) , writes about forward guidance.

Williams, John. November 13, 2012. “The Federal Reserve’s Unconventional Policies.” Federal Reserve Bank of San Francisco Economic Letter.

Glenn Rudebusch quantifies the scope of the liquidity trap

Rudebusch, Glenn. 2009. “The Fed’s Monetary Policy Response to the Current Crisis.” Federal Reserve Bank of San Francisco Economic Letter, 2009-17.

Non Conventional Monetary Policy

Here is the Cleveland Fed’s tool that lets you examine the Fed’s current balance sheet.

This European Central Bank speech by Lorenzo Bini Smaghi provides some useful background.

Here is the economists’ petition against TARP.

Two time Nobel Prize Winner Joseph Stiglitz was not a big fan of TARP. Most economists now believe that it was a good policy.

Siglitz Joseph. 9/26/08. “Henry Paulson’s Shell Game. The Nation

Andrew Sorkin has a book, “Too Big To Fail,” which takes a favorable view of TARP. Here is an excerpt from Vanity Fair.

Sorkin, Andrew. 11/09, “Wall Street’s Near-Death Experience,” Vanity Fair

Here is a Reuters article on the TARP  Congressional Oversight Panel’s final meeting.

HBO also made a pretty good movie about the key events in the financial crisis. I encourage you to watch it. Paul Giamatti is strong as Ben Bernanke.

Fiscal Policy: Theory and Evidence

Here are Christina Romer’s remarks in support of a large fiscal multiplier.

Christina D. Romer. As prepared for the National Association of Business Economists 25th annual Washington Economic Policy Conference, Washington, D.C., March 3, 2009

Read Robert Barro’s WSJ op/ed. He argues for a much smaller multiplier.

Barro, R.. 1/22/09. “Government Spending is No Free Lunch.’’ Wall Street Journal

Here is Valarie Ramey’s meta-analysis of fiscal multipliers:

Ramey, V. 2011. “Can Government Purchases Stimulate the Economy?” Journal of Economic Literature, 49(3): 673-685.

Here is a meta-analysis of fiscal policy’s impact on growth.

Nijkamp, P. and J. Poot. 2004. “Meta-analysis of the Effect of Fiscal Policies on Long-run Growth.”
European Journal of Political Economy, 20: 91-124.


Fiscal Stimulus and the Automotive Bailout

Steven Rattner, a member of the automotive task force, writes for Fortune about the decision to bail out GM and Chrysler.

Rattner, Steven. 10/21/09. “The Auto Bailout: How We Did It.” Fortune

Nancy Cook writes about the impact of sequestration.

Cook, Nancy. July 13, 2013. “The Sequester’s Devastating Impact on America’s Poor.” The Atlantic.

Here is the CBO’s report on the impact of the 2008 tax rebates.

Here is the CBO’s November 2012 report on the impact of the ARRA.

The European Debt Crisis

Phillip Lane has an excellent paper describing the factors that led to the debt crisis.

Lane, P. 2012. “The European Sovereign Debt Crisis.” Journal of Economic Perspectives, Vol, 36(3): 49-68.

Here is an article on Ireland from the Economist.

December 8, 2012. “Light at the end of the tunnel.” The Economist

This article from CNN describes the ECB bond buying program.

Rooney, Ben. September 6, 2012. “ECB Outlines Bond-Buying Plan.”

Here is Paul Krugman’s take on the July 2015 Greek crisis.

Krugman, P. July 12, 2015. “Killing the European Project.” New York Times

Covid and the Economy: Theory:

Guerrieri, V., Lorenzoni, G., Straub, L. and I. Werning. 2020. Macroeconomic Implications of Covid-19? Can Negative Supply Shocks Cause Demand Shortages? NBER Working Paper #26918

Covid and the Economy: empirical Evidence

Baqaee, D., Farhi, E., Mina, M., and J. Stock. 2020. Reopening Scenarios.” NBER Working Paper #27244

Here is a less technical post about the paper.

The following topics will not be covered in Fall 2020 

The U.S. Fiscal Outlook

Here is the CBO’s March 2013 forecast.

Congressional Budget Office. March 2013. “Updated Budget Projections: Fiscal Years 2013 to 2023.”

This article from the New Yorker is a good short summary of the majority case against fiscal austerity during a  severe recession.

Cassidy, J. April 17, 2013. “The Crumbling Case for Austerity Economics.” The New Yorker

Steven Pearlstein is more sympathetic to austerity, at least for some countries.

Pearlstein, S. May 14, 2013. “The Case for Austerity Isn’t Dead Yet.” Washington Post

The Economist analyses two academic papers and finds to case for austerity to be dubious.

June 14, 2011. “Cut or Loose?” The Economist


Regulatory Reform

Here is an interesting survey regarding the effectiveness of Dodd-Frank.

Konczal, Mike. July 20, 2013. “Does Dodd-Frank Work? We Asked 16 Experts to Find Out.” Washington Post, Wonk Blog.
Here is a summary of the Dodd-Frank financial reform law enacted in the Summer of 2010.

Grier, Peter. 7/21/10. “Financial Reform Law: What’s in it and How does it Work?” Christian Science Monitor

This webpage allows you to submit a compliant to the Consumer Financial Protection Bureau. More importantly, it describes how the process works.

This article examines the partial repeal of Glass-Steagall.

Sanati, Cyrus. November 12, 2009. “10 Years Later, Looking at Repeal of Glass-Steagall.” New York Times, Dealbook

The Economist is highly sceptical of Dodd-Frank.

February 18, 2012. “Too Big Not too Fail.” The Economist


These data from the BLS show the current composition of unemployment.

Mark Thoma posts about the structural vs. cyclical unemployment issue.

A discussion of unemployment compensation from the Atlantic’s Derek Thompson.

Thompson, Derek. July 20, 2010. “The Case for and Against Unemployment Insurance.” The Atlantic

The Economist writes about the global problem of youth unemployment

April 27, 2013. “Generation Jobless.” The Economist




This article from the Economist is unimpressed with the third arrow of Abenomics.

June 15, 2013. “Not So Super.” The Economist

This academic paper discusses the problem of zombie banks and firms

Caballero, R., Hoshi, T. and A. Kashyap. 2008. “Zombie Lending and Depressed Restructuring in Japan.” American Economic Review, Vol. 98(5), 1943-1977.

This article argues that Japan’s lost decades are a myth.

Fingleton, Eamonn. January 6, 2012. “The myth of Japan’s Failure.” New York Times

The Economist features an interesting exchange among economists regarding the reality of the lost decades. Here is a followup.

August 3, 2012. The Japanese Tragedy. The Economist

August 6, 2012. The Japanese Tragedy, cont. The Economist