Menzie Chinn's Course on the Crisis
By Arnold Kling
The syllabus looks interesting, but I think there are two topics that I would emphasize more if I were teaching it.
1. How did we get here? Most people seem to start their history of the crisis in about 2007 or so. A few go back to 2000 or so. My paper is unusual in that I show how the regulatory approach that served poorly during the housing boom was shaped by the previous crisis, involving the S&Ls in the 1980s. Chinn puts the post-crash reports of the International Monetary Fund on his reading list. What I find much more interesting are the pre-crash reports, in which the IMF folks see the financial system as safe and sound.
2. What happened to mainstream macroeconomics? The conventional wisdom of more than twenty years (“the state of macro is good,” in Olivier Blanchard’s memorable phrase) seemed to vanish overnight. Why? Perhaps the hypothesis that monetary theory is cyclical has merit. I find the whole issue fascinating.
To make room for these issues, I might trim the discussion of fiscal policy.