Financial Crises, Market Crashes, and Economic Depressions

Summer 2011

Jeffrey Parker, Reed College

Final Essays: Due Thursday, August 4

You are to write short essays (3-5 pages) in response to the following questions.

1. Lessons from the past

How does your study of past financial crises inform your understanding of the events that occurred in 2007 and 2008? In other words, "What is not different this time?" I'd prefer that you provide a bit of detail about a couple of points rather than attempting to catalog all the similarities you can identify.

2. Macroeconomic policies for the United States

The United States is still in the economic doldrums after a severe (by postwar standards) recession. The government's debt/GDP ratio is high by historical standards, rising rapidly with large current government deficits, and projected to increase dramatically as the population ages in coming decades. What fundamental principles should guide monetary (Fed) and fiscal (budget) policy in the long run? What principles should guide monetary and fiscal policy in the short run? What are the broad implications of these principles for policies for the next year and decade? (Bring evidence from historical crises into your answer when you can.)