A Crash Course on the Euro Crisis
54 Pages Posted: 7 Oct 2019
There are 2 versions of this paper
A Crash Course on the Euro Crisis
Date Written: September 2019
Abstract
The financial crises of the last twenty years brought new economic concepts into classroom discussions. This article introduces undergraduate students and teachers to seven of these models: (i) misallocation of capital inflows, (ii) modern and shadow banks, (iii) strategic complementarities and amplification, (iv) debt contracts and the distinction between solvency and liquidity, (v) the diabolic loop, (vi) regional flights to safety, and (vii) unconventional monetary policy. We apply each of them to provide a full account of the euro crisis of 2010-12.
Keywords: Amplification, Euro crisis, financial crisis, Pecuniary externalities, safe asset, shadow banking, systemic risk, teaching
JEL Classification: E44, F32, G01
Suggested Citation: Suggested Citation
Markus Konrad Brunnermeier (Contact Author)
Princeton University - Department of Economics ( email )
Bendheim Center for Finance
Princeton, NJ
United States
609-258-4050 (Phone)
609-258-0771 (Fax)
HOME PAGE: http://www.princeton.edu/¡markus
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A Crash Course on the Euro Crisis
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