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

89 Pages Posted: 23 Mar 2020 Last revised: 16 Feb 2022

See all articles by Daniel Levy

Daniel Levy

Bar-Ilan University - Department of Economics; Emory University - Department of Economics; Rimini Centre for Economic Analysis; International Centre for Economic Analysis; International School of Economics at Tbilisi State University

Tamir Mayer

Bar-Ilan University - Graduate School of Business Administration

Alon Raviv

Bar-Ilan University - Graduate School of Business Administration

Date Written: February 13, 2022

Abstract

.We study the economics and finance scholars’ reaction to the 2008 financial crisis using machine learning language analyses methods of Latent Dirichlet Allocation and dynamic topic modelling algorithms, to analyze the texts of 14,270 NBER working papers covering the 1999–2016 period. We find that academic scholars as a group were insufficiently engaged in crises’ studies before 2008. As the crisis unraveled, however, they switched their focus to studying the crisis, its causes, and consequences. Thus, the scholars were “slow-to-see,” but they were “fast-to-act.” Their initial response to the ongoing Covid-19 crisis is consistent with these conclusions.

Keywords: 2008 Financial Crisis, Financial Crises, Economic Crisis, Great Recession, Textual Analysis, LDA Topic Modeling, Dynamic Topic Modeling, Machine Learning, 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 (February 13, 2022). Journal of Financial Stability, Forthcoming, 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/biography/levy-daniel.html

Rimini Centre for Economic Analysis ( email )

Rimini
Italy

HOME PAGE: http://https://www.rcea.world/

International Centre for Economic Analysis ( email )

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

HOME PAGE: http://https://iceanet.org/

International School of Economics at Tbilisi State University ( email )

16 Zandukeli Street
Tbilisi, 0108
Georgia

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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