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14.454

Economic Crises

3-0-3 units · Graduate

Provides an overview of models of the business cycle caused by financial markets' frictions and shocks. Topics include credit crunch, collateral shocks, bank runs, contagion, speculative bubbles, credit booms, leverage, safe asset shortages, capital flows and sudden stops. Enrollment limited.

Spring 2026

This half-semester, 13-week course provides a fast-paced description of the canonical macroeconomic models of financial frictions and crises. We will cover various topics, including (i) financial amplification mechanisms; (ii) financial intermediation and credit crunches; (iii) coordination failures and bank runs; (iv) speculative bubbles and credit booms; (v) liquidity traps and deleveraging; and (vi) sudden stops and financial contagion.

Readings

Prerequisites & course information

Prereq: 14.453 and permission of instructor G (Spring; second half of term) 3-0-3 units

Sources