2018, 10th Annual Feldstein Lecture, Raghuram Rajan, "Analyzes Role of Liquidity in Recent Financial Crisis"

Raghuram Rajan of the University of Chicago and NBER recently delivered the Martin Feldstein Lecture at the NBER Summer Institute. A former governor of the Reserve Bank of India and chief economist of the International Monetary Fund, Rajan analyzed the 2007-09 financial crisis through a consideration of reactions to either excess or insufficient liquidity in the markets. "When you see a combination of high credit growth and rising asset prices, you should be screaming ‘Fire!’" he said, but herd behavior in the credit market keeps the good times going, while expectations of illiquidity "can lead to frozen markets and credit" as herd behavior in the opposite direction exaggerates downturns.

Read the published version of the Lecture