What Caused the Financial Crisis

Acknowledgments

Acknowledgments The essays in this book (with the exception of the Afterword) originated in a special issue on the causes of the financial crisis published in 2009 in Critical Review: A Journal of Politics and Society (vol. 21, nos. 2–3), published by Routledge for the Critical Review Foundation. I thank the authors who appeared in that volume (and this one) for having contributed such a spectacular group of papers, unlike any other that has yet been published, and Routledge for permission to reprint them. I thank Erin Graham at the University of Pennsylvania Press for seeing the potential in that volume for a book that would fill a void in scholarly and public understanding of the financial crisis. Her encouragement and the cooperation of the Press have been invaluable, as has been advice in the revision of my Introduction from Less Antman, Howard Baetjer, Amar Bhidé, William M. Isaac, Ira Kay, Hal Scott, and Bill Woolsey. My warm thanks to Juliusz Jabłecki and Wladimir Kraus, without whose tutorials on the nature of bank capital and the mysteries of capital regulations I would have been quite lost. The usual disclaimer applies with extra force to what I managed to take away from these lessons. Viral V. Acharya, David Bernstein, Peter J. Boettke, Richard A. Brown, Tyler Cowen, Samuel DeCanio, Shterna Friedman, Steven Gjerstad, Juliusz Jabłecki, Garett Jones, Jeffrey Rogers Hummel, William M. Isaac, Arnold Kling, Marisa Maleck, Matthias Rieker, Bill Woolsey, and Todd Zywicki made much-appreciated comments on previous drafts and, in other cases, provided welcome research leads. I am grateful as well to Victoria Ivashina and David Scharfstein for releasing to me the data on which Figure 1.1 is based. Richard A. Posner deserves special thanks for agreeing to write an Afterword to the book, despite the fact that in my Introduction and elsewhere I have disagreed with his analysis of the causes of the crisis. 360 Acknowledgments Most of all, however, I thank Shterna Friedman, Critical Review’s managing editor, for overseeing the production of the special issue of the journal, preparing the revised manuscript for publication in book form, and for being my intellectual soulmate, sounding board, and critic, which meant, in this case, becoming as familiar with the intricacies of the financial crisis as I had to become. John B. Taylor thanks John Cogan, Angelo Melino, John Murray, George Shultz, and participants in the Global Markets Working Group for helpful comments and suggestions on Chapter 5. It is adapted, with the kind permission of the Bank of Canada, from ‘‘The Financial Crisis and the Policy Responses: An Empirical Analysis of What Went Wrong,’’ which appeared in A Festschrift in Honour of David Dodge’s Contributions to Canadian Public Policy (Ottawa: Bank of Canada, 2009), and was originally a lecture delivered at a conference honoring Dodge sponsored by the Bank of Canada in November , 2008. Peter J. Wallison thanks Edward Pinto for research in preparing the original version of Chapter 6. Daron Acemoglu thanks David Autor, Ricardo Caballero, Simon Johnson, Bengt Holmstrom, and James Poterba for comments on Chapter 11, a different version of which appeared as Policy Insight No. 28, published online by the Centre for Economic Policy Research. David Colander, Michael Goldberg, Armin Haas, Katarina Juselius , Alan Kirman, Thomas Lux, and Brigitte Sloth produced (with Hans Föllmer) a different version of Chapter 12 as the report of the working group on the ‘‘Modeling of Financial Markets’’ at the 98th Dahlem Workshop, ‘‘Is There a Mathematics of Social Entities?’’ in 2008. Colander served as moderator of this group and Lux served as rapporteur. The workshop was organized by Carlo Jaeger and Rupert Klein. An expanded version of the initial conference report can be found at http://ideas.repec.org/p/kie/kieliw/1489.html. The web version of the report, entitled ‘‘The Financial Crisis and the Systemic Failure of Academic Economics,’’ has generated much discussion, and the authors are thankful to the many people who sent in suggestions, especially Peter N. Sørensen, who kindly pointed out several imprecise formulations in an earlier version. ...