ECON 252: Financial Markets
Lecture 26 - Learning from and Responding to Financial Crisis II (Lawrence Summers). In the second of his two lectures in honor of Arthur Okun, Professor Summers points out that real interest rates have been very low in the current subprime crisis. This indicates that the shock to the economy was more a financial breakdown shock than a disinflation shock. But financial breakdown shocks are not necessarily very harmful to the economy, so long as financial intermediation capital is not destroyed. In a financial crisis like the present one, financial firms are likely to take the step of decreasing their leverage, often by contracting loans, which creates its own risks for the economy. Regulators should place pressure on financial institutions to raise their capital and should intervene in near foreclosure situations, but should not attempt to support housing prices. (from oyc.yale.edu)
| Lecture 26 - Learning from and Responding to Financial Crisis II (Lawrence Summers) |
| Time | Lecture Chapters |
| [00:00:00] | 1. Introduction and Recap |
| [00:02:51] | 2. Understanding Recessions in Terms of the IS/LM Model |
| [00:12:35] | 3. Financial Intermediation Capital: Essential for Economic Growth |
| [00:23:08] | 4. U.S. Fiscal Policy Challenges and Objectives |
| [00:36:44] | 5. Caution against Overdependence on Monetary Policy and the Federal Funds Rate |
| [00:48:12] | 6. Obstacles in Introducing New Capital into and Increasing Direct Regulation of ....Financial Markets |
| [00:57:50] | 7. Fiscal Policy Coordination in the International Context: Observations and Suggestions |
| [01:06:56] | 8. Q&A: From Paulson's Proposal to Regulation of Lending and Leverage |
| References |
| Lecture 26 - Learning from and Responding to Financial Crisis II (Lawrence Summers) Instructor: Professor Robert J. Shiller. Transcript [html]. Audio [mp3]. Download Video [mov]. |
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