Final Exam – Economics 639

Final Exam
Economics 639 / American University
Vaughan / Fall 2012
As discussed in class last night, for your final exam I want you to make up four essay questions over the
readings since the midterm exam and answer them. Half of your grade will be based on the strength of
the questions and half on the strength of the answers. The exam is open book, open note. Your exam
must be typed, double spaced and submitted to me via email by 5 pm on December 8 th, 2012. Here are
the constraints:
You must refer to (i.e., cite) all of the papers since the midterm plus one class presentation (not
your own) in the course of answering the four essay questions. A formal bibliography is not
necessary. A reference like – Taylor (2010) – will suffice. But I will count to make sure you
cover all the articles.
Your exam may not exceed 15 pages.
As I have mentioned several times in class, the challenge in studying the financial crisis-cum-recession is
that scientific work is still underway, and a consensus has yet to emerge on many issues. I have assigned
papers on various aspects of the crisis/recession. My goal with this take-home assignment is to force you
to think hard about all the linkages. A strong set of essay questions will collectively weave the papers
into a reasonably coherent narrative.
All the papers covered since the midterm are listed on the following pages. As I indicated last night, I
obtained most of the financial crisis-cum-recession reading list from the following survey article:
Gorton, Gary and Andrew Metrick. “Getting up to Speed on the Financial Crisis: A OneWeekend-Reader’s Guide.” Journal of Economic Literature 50 (2012): 128-150.
Feel free to use this article to organize your thoughts about linkages. Warning – do not quote passages
from this survey article about the papers. I want you to identify key points in the papers on your own.
Good luck!
Final Exam Reading List
Financial Crisis-cum-Great Recession
Bank for International Settlements. 2009. 79th Annual Report. Chapter 2 only
Bernanke, Ben S. 2005. “The Global Saving glut and the U.S. Current Account Deficit.” The
Sandridge Lecture, April 14.
Bernanke, Ben S. 2010. “Causes of the Recent Financial and Economic Crisis.” Testimony before the
Financial Crisis Inquiry Commission, Washington, D.C., September 2.
URL: http://www.federal
Case, Karl E., and Robert J. Shiller. 2003. “Is There a Bubble in the Housing Market?” Brookings
Papers on Economic Activity 2: 299-342.
Covitz, Daniel, Nellie Liang, and Gustavo Suarez. “The Evolution of a Financial Crisis: Collapse of
the Asset-Backed Commercial Paper Market.” Forthcoming, Journal of Finance.
Gorton, Gary, and Andrew Metrick. “Securitized Banking and the Run on Repo.” Forthcoming,
Journal of Financial Economics.
Hetzel, Robert L. “Monetary Policy in the 2008-09 Recession.” Federal Reserve Bank of Richmond
Economic Quarterly 95, no. 2 (2009): 201-233.
International Monetary Fund. 2009. Global Financial Stability Report, October 2009: Navigating the
Financial Challenges Ahead. Washington, D.C.: International Monetary Fund., Chapter 3
International Monetary Fund. 2010. Global Financial Stability Report: Sovereigns, Funding, and
Systemic Liquidity. Washington, D.C.: International Monetary Fund. Chapter 2 only
Ivashina, Victoria, and David Scharfstein. “Bank Lending during the Financial Crisis of 2008.”
Journal of Financial Economics 97 (2010): 319-38.
Kling, Arnold. “Not What They Had in Mind: A History of Policies that Produced the Financial
Crisis of 2008.” Working Paper – Department of Economics, George Mason University,
Pozsar, Zoltan. “Institutional Cash Pools and the Triffin Dilemma of the U.S. Banking System.”
International Monetary Fund Working Paper 11/190, 2011.
Reinhart, Carmen M., and Kenneth S. Rogoff. “Is the 2007 US Sub-prime Financial Crisis So
Different? An International Historical Comparison.” American Economic Review 98 (2008):
Reinhart, Carmen M., and Kenneth S. Rogoff. “From Financial Crash to Debt Crisis.” American
Economic Review 101 (2011): 1676-706.
Schularick, Moritz, and Alan M. Taylor. “Credit Booms Gone Bust: Monetary Policy, Leverage
Cycles, and Financial Crises, 1870-2008.” American Economic Review 102 (2012): 10291061.
Stock, James H. and Mark W. Watson. “Disentangling the Channels of the 2007-2009 Recession.”
Forthcoming, Brookings Papers on Economic Activity, 2012.
Taylor, John B. “Getting Back on Track: Macroeconomic Policy Lessons from the Financial Crisis.”
Federal Reserve Bank of St. Louis Review (May/June 2010): 165-176.