Itay Goldstein and Assaf Razin — Theories of financial crises

Broadly speaking, there are three types of economic crisis: banking crises and panics, credit frictions and market freezes, and currency crises. This column argues that features from these types of crises have been at work and interacted with each other to shape the events of the last few years. From an extensive review of literature on these issues, it’s clear that the biggest challenge policymakers and economists face is in developing integrative models that better describing contemporary economic realities.

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Theories of financial crises
Itay Goldstein, Professor of Finance at the Wharton School of the University of Pennsylvania, and Assaf Razin, Barbara and Steven Friedman Professor of International Economics, Cornell University; Bernard Schwartz Professor (Emeritus), Tel Aviv University