University of Minnesota

Timothy J. Kehoe

Economics 4033

Current Economic Issues:  Financial Crises and Depressions

Fall 2009

This course will study financial crises that have occurred in different countries at different times over the past century or so.  We will employ economic data, analytical models, and historical studies to answer such questions as:  What caused these financial crises?  Why did some of these crises lead to great depressions and others not?

Internet Resources

Syllabus

Notes on Modeling Great Depressions

Great Depressions of the Twentieth Century Webpage

Chile-Mexico Notes

Information on Project Proposals

Study Sheet for Exam

Exam

Guidelines for Essays

Problem Set #1 and Related Material

Problem Set #1

Growth Accounting Notes

Notes on Balanced Growth

Growth Accounting Data

Notes on Using MS Excel to Do Growth Accounting

Problem Set #2 and Related Material

Problem Set #2

Notes on the Growth Model

Notes on Equilibrium of the General Equilibrium Growth Model

MS Excel File for Calculating the Equilibrium of the Finland Model

Notes on Questions 2 and 3 on Problem Set #2

MS Excel File for Solving Questions 2, 3, and 4 on Problem Set #2

Instructions for Doing Questions 2 and 4 for Argentina, plus Raw Data for Argentina, plus MS Excel File for Calibration and Producing Results

Problem Set #3 and Related Material

Problem Set #3

Notes on the Diamond-Dybvig Model of Banking and Bank Runs

How Risk Averse Are You?

Trip to Federal Reserve Bank of Minneapolis on Tuesday, 10 November

Presentation by Robert E. Lucas, Jr.

Presentation by Edward C. Prescott

Article in the Minnesota Daily (Scanned Version)

Story on the University of Minnesota Web Page: Page 1, Page 2

Books

Niall Ferguson (2009), The Ascent of Money: A Financial History of the World, Penguin.

Milton Friedman and Anna Jacobson Schwartz (2008), The Great Contraction, 1929-1933, Princeton University Press, New Edition.

Timothy J. Kehoe and Edward C. Prescott, editors (2007), Great Depressions of the Twentieth Century, Federal Reserve Bank of Minneapolis.

Charles P. Kindleberger (1986), The World in Depression, 1929-1939, University of California Press, Revised and Enlarged Edition.

Charles P. Kindleberger and Robert Aliber (2005), Manias, Panics, and Crashes: A History of Financial Crises, Wiley, Fifth Edition.

Articles

Y. Abrahamsen, R. Aeppli, E. Atukeren, M. Graff, C. Müller, and B. Schips (2005), The Swiss Disease:  Facts and Artefacts:  A Reply to Kehoe and Prescott,” Review of Economic Dynamics, 8, 749–58.

Michel De Vroey and Lucca Pensieroso (2006), Real Business Cycle Theory and the Great Depression:  The Abandonment of the Abstentionist Viewpoint,” B. E. Journal of Macroeconomics (Contributions), 6.

Gonzalo Fernández de Córdoba and Timothy J. Kehoe (2009), “The Current Financial Crisis:  What Should We Learn from the Great Depressions of the Twentieth Century?” The Region, 23, 7–39.

Timothy J. Kehoe and Kim J. Ruhl (2005), “Is Switzerland in a Great Depression?” Review of Economic Dynamics, 8, 759–75.

Lucca Pensieroso (2007), Real Business Cycle Models of the Great Depression:  A Critical Survey,Journal of Economic Surveys, 21, 110–42.

Diamond-Dybvig Model

Douglas W. Diamond (2007), “Banks and Liquidity Creation:  A Simple Exposition of the Diamond-Dybvig Model,” Federal Reserve Bank of Richmond Economic Quarterly, 93, 189–200.

Douglas W. Diamond and Philip H. Dybvig (1983), “Bank Runs, Deposit Insurance, and Liquidity,” Journal of Political Economy, 91, 401–19.

Neil Wallace (1988), “Another Attempt to Explain an Illiquid Banking System:  The Diamond and Dybvig Model with Sequential Service Taken Seriously,” Federal Reserve Bank of Minneapolis Quarterly Review, 12, 3–16.

International Financial Crises

V. V. Chari and Patrick J. Kehoe (1998), Asking the Right Questions About the IMF,”  Federal Reserve Bank of Minneapolis Annual Report, 3–26.

Harold L. Cole and Timothy J. Kehoe (1996), “A Self-Fulfilling Model of Mexico's 1994-95 Debt Crisis,” Journal of International Economics, 41, 309-30.

Timothy J. Kehoe (1998), “Can Debt Crises Be Prevented?” in Richard Levich, editor, Emerging Market Capital Flows, Kluwer Academic Publishers, 3–22.

Timothy J. Kehoe (1996), Comment on “Are Currency Crises Self-Fulfilling?” by Paul Krugman, in Ben S. Bernanke and Julio J. Rotemberg, editors, NBER Macroeconomics Annual 1996, MIT Press, 378–92.

Timothy J. Kehoe (1995), “What Happened in Mexico in 1994–95?” in Patrick J. Kehoe and Timothy J. Kehoe, editors, Modeling North American Economic Integration, Kluwer Academic Publishers, 131–47.

Paul Krugman (1996), “Are Currency Crises Self-Fulfilling?” in Ben S. Bernanke and Julio J. Rotemberg, editors, NBER Macroeconomics Annual 1996, MIT Press, 1996, 346-378.

Much Heat, Little Light (but Entertaining)

Peter Temin (2008), “Real Business Cycle Views of the Great Depression and Recent Events: A Review of Timothy J. Kehoe and Edward C. Prescott’s Great Depressions of the Twentieth Century,” Journal of Economic Literature, 46, 669–84.

Timothy J. Kehoe and Edward C. Prescott (2008), Using the General Equilibrium Growth Model to Study Great Depressions: A Reply to Temin,” Federal Reserve Bank of Minneapolis Research Department Staff Report 418.

Peter Temin (2009), “Using the General Equilibrium Growth Model to Study Great Depressions:  A Rejoinder to Kehoe and Prescott,” Massachusetts Institute of Technology.

Paul Krugman, “How Did Economists Get it so Wrong?”   Freshwater Rage”   “The Freshwater Backlash (Boring)”

John Cochrane, “How Did Paul Krugman Get it so Wrong?”

David K. Levine, “Open Letter to Paul Krugman”


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Last modified:  Monday 14 December 2009 10:59

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