PA 974, Section 001: Policy Responses to the Great Recession
This site provides resources for students in PA 974
at the University of Wisconsin,
Madison for Fall 2009 Semester
Source: Russell and Carter, "How the Giants of Finance Shrank, Then Grew, Under the Financial Crisis," NYT, 13 Sep 2009.
Syllabus |
Important Dates |
Downloadable Course Materials and Information Sources |
Robert M. LaFollette School of Public Affairs |
Department of
Economics
LECTURE: Tu Th 1-2:15 235 Materials Sciences
Instructor
Professor Menzie Chinn
Office Hours: Th 2:30-4:30 (tentative)
Office: 7418 Social Sciences Bldg.
Phone: (608) 262-7397
email:
mchinn at lafollette.wisc.edu
PA974 Syllabus in PDF file. 
This course will examine the hypotheses underlying the origins and propagation of the Great Recession of 2007, and the policy responses that have occurred along a variety of dimensions. The candidate causes include lax monetary policy, the “saving glut”, deregulation, securitization and the widespread use of derivatives, the activities of the Government Sponsored Enterprises (“Fannie Mae” and “Freddie Mac”), among others.
The discussion of responses will include the conduct of monetary policy and fiscal policy, the appropriateness of financial regulatory policy, the harmonization of international financial policy and trade policy. Other policies not typically thought to be related to the workings of the macro economy (housing, energy, sectoral/industrial policy, e.g., automobiles) will also be examined.
Prerequisites: Macroeconomics (either Econ 302 or Public Affairs 854), or consent of instructor. Economics 330 will be useful.
- Term paper due
12/15 12/22 5pm.
Downloadable Course Materials
Required Readings
- Notes on IS-LM
- Notes on Transactions and Portfolio Crowding Out
- IMF, World Economic Outlook, April 2009, Chapter 1.
- M. Jickling, Causes of the Financial Crisis, (Congressional Research Service, January 29, 2009).
- Council of Economic Advisers, Economic Report of the President, 2009 (U.S. GP0, 2009), Chapter 2.
- John B. Taylor, “The Financial Crisis and the Policy Responses: An Empirical Analysis of What Went Wrong,” (November 2008).
Chinn and Frieden, The Lost Decade, Chapters 2.
Chinn and Frieden, The Lost Decade, Chapters 3.
Chinn and Frieden, The Lost Decade, Chapter 4.
- M. Brunnermeier, Deciphering the Liquidity and Credit Crunch, 2007-2008,” Journal of Economic Perspectives 23(1) (Winter 2009).
- P. Mizen, “The Credit Crunch of 2007-2008: A Discussion of the Background, Market Reactions, and Policy Responses,” Federal Reserve Bank of St. Louis Review 90(5) (September/October 2008).
- J.D. Coval, J. Jurek, E. Stafford, “The Economics of Structured Finance,” Harvard Business School Working Paper 09-060. Published Journal of Economic Perspectives 23(1) (Winter 2009).
- David Greenlaw, Jan Hatzius, Anil K Kashyap, Hyun Song Shin, “Leveraged Losses: Lessons from the Mortgage Market Meltdown,” paper presented at US Monetary Policy Forum Conference, February 29, 2008.
- IMF, World Economic Outlook, April 2009, Chapter 4.
- IMF, Global Financial Stability Report (September 2009), Chapter 1.
- NBER, Business Cycle Expansions and Contractions.
- The Financial and Economic Crisis Interpreted in a CC-LM Model
- IMF, World Economic Outlook, April 2009, Chapter 3.
- CBO, Options for Responding to Short-Term Economic Weakness (January 2008).
- Douglas W. Elmendorf, “The State of the Economy and Issues in Developing an Effective Policy Response,” testimony before the Committee on the Budget, U.S. House of Representatives (January 27, 2009).
- CEA, Estimates of Job Creation from the American Recovery and Reinvestment Act of 2009 (Executive Office of the President, May 2009).
- CBO, Estimated Macroeconomic Impacts of the American Recovery and Reinvestment Act of 2009 (March 2, 2009).
- C. Freedman, M. Kumhof, D. Laxton, and J. Lee, “The Case for Global Fiscal Stimulus,” IMF Staff Position Note No. 09/03 (March 6, 2009).
- D. Leigh and S.J. Stehn, “Fiscal and Monetary Policy During Downturns: Evidence from the G7, IMF Working Paper No.09/50 (March 2009).
- D. Elmendorf, “Implementation Lags of Fiscal Policy,” presentation at IMF Fiscal Affairs and Research Departments Conference on Fiscal Policy (June 2, 2009).
- BIS, “Chapter VI. Policy responses to the crisis,” BIS Annual Report (June 29, 2009).
- Glenn Rudebusch, “The Fed’s Monetary Policy Response to the Current Crisis,” FRBSF Economic Letter 2009-17, May 22, 2009.
- James Hamilton, “Concerns about the Fed's New Balance Sheet, in The Road Ahead for the Fed,” edited by John D. Ciorciari and John B. Taylor, Stanford: Hoover Institution Press, 2009.
- BIS, “Chapter VII. Risks and opportunities: towards a fail-safe financial system, BIS Annual Report (June 29, 2009).
- Mathias Dewatripont, Xavier Freixas, and Richard Portes, editors, Macroeconomic Stability and Financial Regulation: Key Issues for the G20 (CEPR, 2 March 2009), pp. 91- .
- Richard Baldwin, and Simon J Evenett, editors, The collapse of global trade, murky protectionism, and the crisis: Recommendations for the G20 (CEPR, 5 March 2009).
- OECD, “Chapter 4: Beyond the Crisis: Medium-term Challenges Relating to Potential Output, Unemployment and Fiscal Positions,” OECD Economic Outlook No 85 (2009).
- Chinn and Frieden, The Lost Decade, Chapter 8.
News Reports and Additional Optional Readings
- Russell and Carter, "How the Giants of Finance Shrank, Then Grew, Under the Financial Crisis," NYT, 13 Sep 2009.
- CEA, The Economic Impact of the American Recovery and Reinvestment Act of 2009 First Quarterly Report, September 10, 2009.
- J. Elmeskov, "What is the economic outlook for OECD countries? An interim Assessment," OECD, Sept. 3, 2009.
- Paul Krugman, "How Did Economists Get It So Wrong?" NY Times Magazine Sept. 2, 2009.
- Barry Eichengreen and Kevin O'Rourke, "A Tale of Two Depressions," VoxEU (1 Sept 2009).
- Menzie Chinn and Jeffry Frieden, "Reflections on the Causes and Consequences of the Debt Crisis of 2008," La Follette Policy Report 19(1) (Fall 2009): 1-5. [pdf].
- IMF conferences
- "The American Reinvestment and Recovery Plan -- By the Numbers"
- CBO, "Cost Estimate of H.R. 1, American Recovery and Reinvestment Act of 2009"
- CBO, "Estimated Macroeconomic Impacts of H.R. 1 as Passed by the House and by the Senate"
- American Recovery and Reinvestment Act website
- P. Cohen, Ivory Tower Unswayed by Crashing Economy, NYT (5 March 09).
- P. Swagel, 2009, "The Financial Crisis: An Inside View," paper presented at the Brookings Panel on Economic Activity, March 2009
- Briefing: The IMF - Mission: possible, Economist, March 10th, 2009
- The Cavalry of Commerce, Economist, March 10th, 2009
- IMF, World Economic Outlook (April 2009).
- Brunnermeier, et al., "The Fundamental Principles of Financial Regulation," Geneva Reports on the World Economy No 11.
- W.W. Eubanks, "Basel II in the United States: Progress Toward a Workable Framework," Congressional Research Service Report RL34485 (May 14, 2008)
- Eric Rosengren, "Can We Ensure that Global Banks Do Not Create Global Problems?"
- A. Kashyap, R. Rajan, J. Stein, "Rethinking Capital Regulation"
- U.S. Treasury, "Financial Regulatory Reform; A New Foundation"
- Kiff et al., "Credit Derivatives: Systemic Risks and Policy Options," IMF Working Paper 09-254 (Nov. 2009).
- R. Baldwin (ed.), The Great Trade Collapse (Nov. 2009).
Tracking the Crisis and Recession
News Sources
Weblogs
Economics and Economic Policy Links
International Organizations
U.S. Government Agencies
Current and Historical Data
- Note: IMF, International Financial Statistics, and World Bank, World Development Indicators, available from DISC.
- St. Louis Fed economic database Thousands
of time series on economic activity, in an easily downloadable form.
- Economic Indicators Many Department of Commerce economic series, all in one place.
- White House Economic Briefing Room Contains
current economic data.
- Economic Indicators Publication of CEA and Congressional Joint Economic Committee contains
recent economic data.
- Bureau of Economic Analysis, Dept. of Commerce Data on GDP and components (the national income and product accounts) as well as other macroeconomic data.
- Bureau of the Census, Dept. of Commerce Data on the characteristics
of the US population as well as of US firms.
- Bureau of Labor Statistics, Dept. of Labor Data on
wages, prices, productivity, and employment and unemployment rates.
- Energy Information Agency, Dept. of Energy Data on
on energy (electricity, gas, petroleum) production, consumption and prices.
- Statistical Abstract of the US
A compilation of statistics about the US, from government and nongovernment sources.
- Bank for International
settlements Effective Exchange Rate Indices.
- Economic Report of the President, various years. The back portion of
this annual publication contains about 70 tables of government economic data.
- NBER Data Specialized economic databases created by
economists associated with the National Bureau of Economic Research.
- NBER listing of economic releases Compendium of links to economic releases, and archived releases.
- Pacific Exchange Rate Service.
- Federal Reserve Board data Monetary, financial and output data
collected by the Nation's central bank.
- Penn World Tables Annual GDP and other data for over a hundred countries, expressed
in dollars, after adjusting for differing price levels.
Other
PA 974 Policy Responses to the Great Recession / UW Madison / mchinn@lafollette.wisc.edu / 9 December 2009