QUESTION 1 What role does psychology play in the formation and collapse of financial bubbles? SEMINAR NOTES FOR THIS QUESTION: https://ufile.io/td8uxn0z • QUESTION 2 What role does a central bank play in creating and managing a financial crisis? SEMINAR NOTES FOR THIS QUESTION: https://ufile.io/erg2z4ag • QUESTION 3 How do financial bubbles and crises effect aggregate economic activity? SEMINAR NOTES FOR THIS QUESTI

H​‌‍‍‍‌‍‌‍‍‌‌‌‌‌‍‍‍‍‌‌​ello, The assignment is 4000 words, and you have the option between three different questions. I will let you choose and will provide with the essential material you need to answer each question. This assignment needs to be top notch work as the person reading is very strict in marking and grading essays. Please use the links of the seminars to see an example of how to answer each question. Please interact will the material that I have provided and add your own refences and readings too. I would appreciate if you let me know which question and crisis you will discuss and from which perspective in advance so that I can provide you with extra materials. Do not hesitate to contract me if you’re unclear about anything. Discuss with reference to at least one crisis covered in this module and from at least two different perspectives (covered in lecture slides) one of the following three essay topics: (you can choose the one you prefer to answer) • QUESTION 1 What role does psychology play in the formation and collapse of financial bubbles? SEMINAR NOTES FOR THIS QUESTION: https://ufile.io/td8uxn0z • QUESTION 2 What role does a central bank play in creating and managing a financial crisis? SEMINAR NOTES FOR THIS QUESTION: https://ufile.io/erg2z4ag • QUESTION 3 How do financial bubbles and crises effect aggregate economic activity? SEMINAR NOTES FOR THIS QUESTION: https://ufile.io/n8e9m0js CRISIS: • Week 2: The Dutch Tulipmania of the 1630s- Lecture slides: https://ufile.io/i62jipzg • Week 3: Mississippi bubble and the South Sea Bubble of the 1720s- Lecture slides: https://ufile.io/mzh2dm5i • Week 4: The panic of 1825 and UK gold convertibility crises- Lecture slides: https://ufile.io/sqdefy32 • Week 5: The long depression of the 1870s- Lecture slides: https://ufile.io/ru0tc4tc • Week 7: The great depression- Lecture slides: https://ufile.io/mlpjidee • Week 8: Japanese asset price bubble of the 1980s and secular stagnation- Lecture slides: https://ufile.io/rkcuaj53 • Week 9: The dot-com bubble of the late 1990s- Lecture slides: https://ufile.io/eghwl3og • Week 10: The financial crisis of 2008 (I)- Lecture Slides: https://ufile.io/3qfvtpmg • Week 11: The financial crisis of 2008 (II) and the future- what have we learned for today? How is 2020-21 different?- Lectures Slides: https://ufile.io/8jp7hjts READING LIST PER CRISIS: Week 2: The Dutch Tulipmania of the 1630s 1. A history of financial crises: dreams and follies of expectations by Cihan Bilginsoy chapter 2, which outlines the tulipmania crisis 2. A short history of financial euphoria Book, by John Kenneth Galbraith, 1994, Chapter 2 outlines the case of irrational behavior 3. The tulipmania: Fact or artifact? in Public Choice, Article, by Earl A. Thompson, 2007-1-3. This is One of the key views arguing against the existence of irrational behavior in the tulipmania crisis. 4. Famous First Bubbles in The Journal of Economic Perspectives, Article, by Peter M. Garber, 1990 Week 3: Mississippi bubble and the South Sea Bubble of the 1720s 1. Famous first bubbles: the fundamentals of early manias, Book, by Peter M. Garber, 2001 Please read pp 87-112, however we can only digitise part for copyright reasons. 2.

The genesis of macroeconomics: new ideas from Sir William Petty to Henry Thornton, Book, by Antoin E. Murphy, 2009 Read Chapter 3 on John Law’s Monetary System. 3. A history of financial crises: dreams and follies of expectations, Book, by Cihan Bilginsoy, 2015 Read chapters 3 and 4 on the Mississippi and South Sea Bubble Week 4: The panic of 1825 and UK gold convertibility crises 1. Manias, panics, and crashes: a history of financial crises, Book, by Robert Z. Aliber; Charles Poor Kindleberger; Charle​‌‍‍‍‌‍‌‍‍‌‌‌‌‌‍‍‍‍‌‌​s Poor Kindleberger, 2011 Read chapter 11 on the domestic lender of last resort (pages 213-228 2. Monetary theory and policy from Hume and Smith to Wicksell: money, credit, and the economy, Book,by Arie Arnon, c2011 Read chapter 7 (pages 96-125) it gives an overview of Thornton’s position on Central Banking. 3. Devil take the hindmost: a history of financial speculation, Book , by Edward Chancellor, 2000, Chapter 4 pages 96-121. Week 5: The long depression of the 1870s 1. The Crime of 1873 in Journal of Political Economy, Article , by Friedman, Milton, December 1990 Friedman’s view on the financial reasons of the depression starting in 1873 2. The Great Depression in Britain, 1873-1896: A Reappraisal in The Journal of Economic History, Article, by Musson, A. E. 3. The Long-Wave Depression, 1873-97 in The Review of Economics and Statistics, Article, by Rendigs Fels, 02/1949 A short article discussing different views of the 1870s recession. Week 7: The great depression 1. The Debt-Deflation Theory of Great Depressions in Econometrica, Article, by Irving Fisher, 10/1933. This week’s Key theory reading. 2. The Great Depression & the New Deal: a very short introduction, Book, by Eric Rauchway, 2008 Please read chapter 3 3. The clash of economic ideas: the great policy debates and experiments of the last hundred years, Book, by Lawrence H. White, 2012 A comprehensive account of the Austrian Business Cycle theory.Read chapter 3 on the Austrian Business Cycle and as further reading chapter 5 which is a critical account of the Keynesian theory. (Critical from an Austrian perspective) Week 8: Japanese asset price bubble of the 1980s and secular stagnation 1. Stabilizing an unstable economy, Book, by Hyman P. Minsky, c2008 This week’s main contemporary theory reading. 2. The Holy Grail of macroeconomics: lessons from Japan’s great recession, Book, by Richard Koo; ProQuest (Firm), 2009 Read chapter 1 on Japan’s recession 3. Devil take the hindmost: a history of financial speculation, Book, by Edward Chancellor, 2000 Read Chapter 9 on Kamikaze Capitalism Week 9: The dot-com bubble of the late 1990s 1. Irrational exuberance, Book, by Robert J. Shiller, 2015 The basic reading on theory this week. But its a technical read 2. A history of financial crises: dreams and follies of expectations, Book, by Cihan Bilginsoy, 2015 Read chapters 5 and 6 as well as 12 especially if you are doing the essay on bubbles. Chapter 14 is giving you more details for the 1990s decade and its financial engineering. 3. Devil take the hindmost: a history of financial speculation, Book, by Edward Chancellor, 2000 Read chapter 10 4. Copycats and contrarians: why we follow others … and when we don’t, Book, by Michelle Baddeley, 2018 This gives a view on behavioral traits and how they influence market prices. Week 10: The financial crisis of 2008 (I) & Week 11: The financial crisis of 2008 (II) and the future- what have we learned for today? How is 2020-21 different? 1. A history of financial crises: dreams and follies of expectations, Book, by Cihan Bilginsoy, 2015 Read chapters 15, 16 and 17 that focuses on the subprime crisis and other aspects from the 2008 economic crisis. 2. Copycats and contrarians: why we follow others … and when we don’t, Book, by Michelle Baddeley, 2018 This book gives the second of the three perspectives that are presented in week 10 on psychology and the 2008 crisis. 3. The Macroprudential Toolkit in IMF Economic Review, Article, by Anil K Kashyap; Richard Berner; Charles A E Goodhart, 2011-6 4. Neglected Risks: The Psychology of Financial Crises in American Economic Review, Article, by Nicola Gennaioli; Andrei Shleifer; Robert Vishny, 05/2015 A more technical but succinct ​‌‍‍‍‌‍‌‍‍‌‌‌‌‌‍‍‍‍‌‌​article on Gennaioli’s view

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