Financial Crises: A Survey

58 Pages Posted: 18 Aug 2021

See all articles by Amir Sufi

Amir Sufi

University of Chicago - Booth School of Business; NBER

Alan M. Taylor

University of California, Davis - Department of Economics; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Multiple version iconThere are 3 versions of this paper

Date Written: August 17, 2021

Abstract

Financial crises have large deleterious effects on economic activity, and as such have been the focus of a large body of research. This study surveys the existing literature on financial crises, exploring how crises are measured, whether they are predictable, and why they are associated with economic contractions. Historical narrative techniques continue to form the backbone for measuring crises, but there have been exciting developments in using quantitative data as well. Crises are predictable with growth in credit and elevated asset prices playing an especially important role; recent research points convincingly to the importance of behavioral biases in explaining such predictability. The negative consequences of a crisis are due to both the crisis itself but also to the imbalances that precede a crisis. Crises do not occur randomly, and, as a result, an understanding of financial crises requires an investigation into the booms that precede them.

JEL Classification: E32,E44,E7,G01,G10,N20

Suggested Citation

Sufi, Amir and Taylor, Alan M., Financial Crises: A Survey (August 17, 2021). University of Chicago, Becker Friedman Institute for Economics Working Paper No. 2021-97, Available at SSRN: https://ssrn.com/abstract=3906775 or http://dx.doi.org/10.2139/ssrn.3906775

Amir Sufi (Contact Author)

University of Chicago - Booth School of Business ( email )

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Alan M. Taylor

University of California, Davis - Department of Economics ( email )

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HOME PAGE: http://www.econ.ucdavis.edu/faculty/amtaylor/

National Bureau of Economic Research (NBER)

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Centre for Economic Policy Research (CEPR)

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