Working Paper: NBER ID: w18398
Authors: Markus K. Brunnermeier; Martin Oehmke
Abstract: This chapter surveys the literature on bubbles, financial crises, and systemic risk. The first part of the chapter provides a brief historical account of bubbles and financial crisis. The second part of the chapter gives a structured overview of the literature on financial bubbles. The third part of the chapter discusses the literatures on financial crises and systemic risk, with particular emphasis on amplification and propagation mechanisms during financial crises, and the measurement of systemic risk. Finally, we point toward some questions for future research.
Keywords: No keywords provided
JEL Codes: G00; G01; G20
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| rational behavior (D01) | formation of bubbles (E32) |
| belief distortions (G41) | formation of bubbles (E32) |
| formation of bubbles (E32) | overinvestment (G31) |
| formation of bubbles (E32) | moral hazard (G52) |
| bursting of bubbles (E32) | crisis phase (H12) |
| crisis phase (H12) | amplification mechanisms (C59) |
| amplification mechanisms (C59) | severity of the crisis (H12) |
| credit-fueled bubbles (F65) | deleveraging during crises (F65) |
| runup phase (E44) | crisis phase (H12) |