Monetary Economics for MSc, EC424 Nobuhiro Kiyotaki

Syllabus, Lent term 2011 O¢ ce hour: Mon 2-3

Papers with * are emphasized in the lecture

1. Overview of Financial Crisis

(a) Historical Overview

Milton Friedman and Anna Schwartz. 1963. A Monetary History of the United
States, 1867-1960. Princeton. Princeton University Press.
Barry Eichengreen. 1992. Golden Fetters: The Gold Standard and the Great Depres-
sion, 1919-1939. Oxford and New York. Oxford University Press.
(*) Ben Bernanke. 1993. "The world on a cross of gold: A review of ’Golden fetters’."
Journal of Monetary Economics 31: 251-267.
Carmen Reinhart and Kenneth Rogo¤. 2009. This Time is Di¤erent: A Panoramic
View of Eight Centuries of Financial Crises. Princeton: Princeton University Press.
(*) — — — – and — — — — . 2010. "From Financial Crash to Debt Crisis." NBER
Working Paper 15795.
(*) — — — – and Vincent Reinhart. 2010. "After the Fall." Prepared for Federal
Reserve Bank of Kansas City Jackson Hole Symposium. Available at the author’s home-
page.
Takeo Hoshi and Anil Kashyap. 2010. "Will the US bank recapitalization succeed?
Eight Lessons from Japan." Journal of Financial Economics 97(3): 398-417.

(b) Recent Crisis

Frederic Mishkin. 2010. "Over the Cli¤: From the Subprime to the Global Financial
Crisis." NBER Working Paper 16609.
(*) Arvind Krishnamurthy. 2010. "How Debt Markets Have Malfunctioned in the
Crisis." Journal of Economic Perspectives (Winter): 3-28.
Gary Gorton and Andrew Metrick. 2009. "Securitized Banking and the Run on
Repo." NBER Working Paper 15223.
(*) Tobias Adrian and Hyun Song Shin. 2009. "Money, Liquidity, and Monetary
Policy." American Economic Review: Papers and Proceedings. 600-605.
(*) Nobuhiro Kiyotaki. 2010. "Discussion of Aschcraft, Malz and Pozsar’s ’Federal
Reserve’s Term Asset-Backed Security Loan Facility (TALF)’." Mimeo. Available at
Moodle.
Thorvaldur Gylfason, Bengt Holmstrom, Sixten Korkman, Hans Tson Soderstrom
and Vesa Vihriala. 2010. Nordics in Global Crisis: Vulnerability and Resilience. Re-
search Institute of the Finish Economy.

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 2. Models of Financial Intermediations and Limited Market Participation

(*) Douglas Diamond and Philip Dybvig. 1983. "Bank Runs, Deposit Insurance and
Liquidity." Journal of Political Economy. 401-419.
(*) Stephen Williamson. 1987. "Recent Development of Modeling Financial Interme-
diation." Quarterly Review, Federal Reserve Bank of Minneapolis (Summer). Available
at http://www.minneapolisfed.org/research/qr/.
Cheng Wang and Stephen Williamson. 1998. "Debt contracts and …nancial interme-
diation with costly screening." Canadian Journal of Economics. 573-595.
Bengt Holmstrom and Jean Tirole. 1998. "Private and Public Supply of Liquidity."
Journal of Political Economy. 1-40.
(*) Franklin Allen and Douglas Gale. 1994. "Limited Market Participation and
Volatility of Asset Prices." American Economic Review. 933-955.
(*) John Kareken and Neil Wallace. 1978. "Deposit Insurance and Bank Regulation:
A Partial-Equilibrium Exposition." Journal of Business. 413-438.
George Akerlof and Paul Romer. 1993. "Rooting: The Economic Underworld of
Bankruptcy for Pro…t." Brookings Papers on Economic Activity (2).
Raghuran Rajan. 2005. "Has Financial Development Made the World Riskier?"
Federal Reserve Bank of Kansas City Jackson Hole Symposium.

3. Asset Prices and Financial Accelerator

(*) Nobuhiro Kiyotaki and John Moore. 1997. "Credit Cycles." Journal of Political
Economy. 211-248.
(*) — — — — – and — — — — –. 2002. "Balance-Sheet Contagion." American Eco-
nomic Review Papers and Proceedings. 46-50.
Kosuke Aoki, Gianluca Benigno, and Nobuhiro Kiyotaki. 2008. "Capital Flows
and Asset Prices." in R. Clarida and F. Giavazzi ed. NBER International Seminar on
Macroeconomics. University of Chicago Press. Available at my homepage.
Ben Bernanke, Mark Gertler and Simon Gilchrist. 1999. "The Financial Accelera-
tor in a Quantitative Business Cycle Framework." in The Handbook of Macroeconomics,
edited by John Taylor and Michael Woodford. 1341-1393. Elsevier Science B.V. Ams-
terdam.
Simon Gilchrist, Vladimir Yankov and Egon Zakrajsek. 2009. "Credit Market Shocks
and Economic Fluctuations: Evidence from Corporate Bond and Stock Markets." NBER
Working Paper 14863.

4. Money, Liquidity and Business Cycles

N. Kiyotaki and R. Wright. 1992. "Acceptability, Means of Payments and Media of

Exchange." Quarterly Review, Federal Reserve Bank of Minneapolis (Summer).
— — — –and J. Moore. 2002. "Evil is the Root of All Money." American Economic
Review Papers and Proceedings. 62-66.
(*) Nobuhiro Kiyotaki and John Moore. 2005. "Financial Deepening." Journal of
European Economic Association. 701-713. Available at my homepage.

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 (*) — — –and — — –. 2008 revised. "Liquidity, Business Cycles and Monetary Pol-
icy." Technical paper for Clarendon Lecture 2. Available at my homepage.

5. Monetary Policy

(*) B. Bernanke and M. Gertler. 1995. "Inside the Black Box: the Credit Channel
of the Monetary Policy." Journal of Economic Perspectives (Fall): 27-48.
Eric Leeper, Christopher Sims and Tao Zha. 1996. "What Does Monetary Policy
Do?" Brookings Papers on Economic Activity 2. 1-78.
Peter van Els, Alberto Locarno, Benoit Mojon and Julin Morgan. 2003. "New
Macroeconomic Evidence on Monetary Policy Transmission in the Euro Area." European
Economic Review. 720-730.
Tack Yun. 1996. "Nominal price rigidity, money supply endogeneity, and business
cycles," Journal of Monetary Economics. 345-370.
Michael Woodford. 2003. Interest and Prices. Chapter 3. 139-236. Princeton:
Princeton University Press.
Lawrence Christiano, Martin Eichenbaum and Charles Evans. 2005. "Nominal
Rigidities and the Dynamic E¤ects of a Shock to Monetary Policy," Journal of Political
Economy. 1-45.
(*) Jordi Gali. 2008. Monetary Policy, In‡ation, and the Business Cycle. Chapter
3. 41-70. Princeton: Princeton University Press.

6. Credit Policy and Prudential Policy

(*) Marco Del Negro, Gauiti Eggertsson, Andrea Ferrero and Nobuhiro Kiyotaki.
2010. "The Great Escape?" Mimeo, Available at my homepage.
(*) Mark Gertler and Nobuhiro Kiyotaki. 2010. "Financial Intermediation and Cred-
ity Policy in Business Cycle Analysis," in Benjamin Friedman and Michael Woodford
(eds.) Handbook of Monetary Economics, Volume 3A. 547-599. Elsevier Science B.V.
Amsterdam.
(*) — — — –, — — — – and Albert Queralto. 2010. "Financial Crises, Bank Risk
Exposure and Government Financial Policy." Mimeo.
Oliver Hart and Luigi Zingales. 2010. "Curbing Risk on Wall Street," National
A¤airs (Spring): 20-34.
Raghuran Rajan. 2010. "Too Systemic to Fail." Mimeo. Available at his homepage.