Crash Course on Crises

Markus K. Brunnermeier is the Edwards S. Sanford Professor of Economics at Princeton University. His books include The Resilient Society and The Euro and the Battle of Ideas (Princeton). Ricardo Reis is the A. W. Phillips Professor of Economics at the London School of Economics. He is a winner of the 2021 Yrjö Jahnsson Award and advises many central banks.

• 1 Introduction1.1 Crashes1.2 Organization of the Book1.3 Uses of the Book1.4 AcknowledgmentsPART I. GROWING FRAGILITIES: THE RUN-UP TO CRISES2 Bubbles and Beliefs2.1 A Model of Bubbles with a Keynesian Beauty Contest2.2 The Japanese Bubble of the Mid-1980s2.3 The Internet Bubble of 1998–20003 Capital Inflows and Their (Mis)allocation3.1 A Model of Misallocation3.2 The Seeds of the Euro Crisis: Portugal’s Twenty-First Century Slump3.3 Chile’s 1970s Liberalization and 1982 Crash4 Banks and Their Cousins4.1 Modern and Shadow Banks4.2 U.S. Subprime Mortgages and Securitization4.3 The Spanish Credit Boom of the 2000sPART II. CRASHES: TRIGGERS AND AMPLIFIERS5 Systemic Risk, Amplification, and Contagion5.1 Strategic Complementarities, Amplification, Multiplicity5.2 Systemic Risk in the Irish Banking Sector in the 2000s5.3 The Emerging Markets’ Storm of 1997–986 Solvency and Liquidity6.1 Debt and the Challenging Illiquidity-Insolvency Distinction6.2 The Run on the German Banking System in 19316.3 The Greek Sovereign Debt Crisis of 2010–12 and the IMF7 The Nexus between the Private and Public Sectors7.1 The Diabolic/Doom Loop7.2 European Banks and Their Sovereigns in 2007–107.3 Argentina’s 2001–02 Crisis8 The Flight to Safety8.1 Safe Assets8.2 Borrowing Costs in the Euro Area: The 2010–12 Crisis8.3 The Pandemic Flight to Safety of 2020PART III. POLICIES AND RECOVERIES9 Exchange Rate Policies and the Speed of Recoveries9.1 A Model of Exchange Rates and Recovery9.2 The Mexican Tequila Crisis of 1994–959.3 The Lasting Stagnation from the 2008 Global Financial Crisis10 The New Conventional Monetary Policy10.1 Reserve Satiation and Quantitative Easing10.2 The Bank of Japan’s Innovations since 199810.3 The Euro Area Yield Curve during Crisis11 Fiscal Policy and the Real Interest Rates11.1 Savings and Investment, Revisited11.2 The Rise of Savings during the 2020 Pandemic11.3 The End of the U.S. Great DepressionPART IV. PARTING WORDS12 ConclusionBibliographyIndex

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