Economists in the 2008 Financial Crisis: Slow to See, Fast to Act

66 Pages Posted: 23 Mar 2020 Last revised: 27 Apr 2020

See all articles by Daniel Levy

Daniel Levy

Bar-Ilan University - Department of Economics; Emory University - Department of Economics; Rimini Center for Economic Analysis

Tamir Mayer

Bar-Ilan University - Graduate School of Business Administration

Alon Raviv

Bar-Ilan University - Graduate School of Business Administration

Date Written: April 24, 2020

Abstract

Textual analysis of 14,270 NBER Working Papers published during 1999–2016 is done to assess the effects of the 2008 crisis on the economics literature. The volume of crisis-related WPs is counter-cyclical, lagging the financial-instability-index. WPs by the Monetary-Economics, Asset-Pricing, and Corporate-Finance program members, hardly refer to “crisis/crises” in the pre-crisis period. As the crisis develops, however, their study-efforts of crisis-related issues increase rapidly. In contrast, WPs in macroeconomics-related programs refer quite extensively in the pre-crisis period to “crisis/crises” and to crises-related topics. Overall, our findings are consistent with the claim that economists were not engaged sufficiently in crises studies before the 2008 crisis. However, counter to the popular image, as soon as the crisis began to unravel, the NBER affiliated economists responded dramatically by switching their focus and efforts to studying and understanding the crisis, its causes and its consequences. Thus, although economists were slow to see the crisis coming, they were fast to act. Preliminary observations on current developments suggest that the economists’ initial response to the ongoing Covid-19 crisis is consistent with these conclusions.

Keywords: 2008 Financial Crisis, Financial Crises, Textual Analysis, LDA Topic Modeling, Securitization, Repo, Sudden Stop

JEL Classification: A11, C38, C55, E32, E44, E52, E58, F30, G01, G20, G21, G28

Suggested Citation

Levy, Daniel and Mayer, Tamir and Raviv, Alon, Economists in the 2008 Financial Crisis: Slow to See, Fast to Act (April 24, 2020). Available at SSRN: https://ssrn.com/abstract=3543090 or http://dx.doi.org/10.2139/ssrn.3543090

Daniel Levy

Bar-Ilan University - Department of Economics ( email )

Ramat-Gan, 5290002
Israel
+972 3 531-8345 (Phone)
+972 3 738-4034 (Fax)

HOME PAGE: http://econ.biu.ac.il/en/levy

Emory University - Department of Economics ( email )

1602 Fishburne Drive, Suite 306
Rich Building
Atlanta, GA 30322-0001
United States

HOME PAGE: http://economics.emory.edu/home/people/faculty/Levydaniel.html

Rimini Center for Economic Analysis ( email )

Wilfrid Laurier University
75 University Ave W.
Waterloo, Ontario N2L3C5
Canada

HOME PAGE: http://rcea.org/

Tamir Mayer

Bar-Ilan University - Graduate School of Business Administration ( email )

Ramat Gan
Israel

Alon Raviv (Contact Author)

Bar-Ilan University - Graduate School of Business Administration ( email )

The Graduate School of Business Administration
Ana and Max Web st
Ramat Gan
Israel

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