Harvard Economists' Take on the Financial Crisis

A new webpage hosted by the economics department in the Faculty of Arts and Sciences offers a central place to find out what the department’s faculty members have been saying lately about the financial crisis gripping the United States and the world.

Among the recent items:

• Ropes professor of political economy Alberto Alesina (writing in the Wall Street Journal with Luigi Zingales, a professor at the Chicago Booth School of Business) argues that while the stimulus package injects capital into the system, it doesn’t do enough to encourage risk-taking on the part of consumers, business owners, or investors.
• Warburg professor of economics Robert Barro believes the Obama team is overestimating the economic impact of proposed government spending on public-works projects; also writing in the Wall Street Journal, he uses his own analysis of World War II spending, and its impact, to buttress his argument.
• Baker professor of economics Martin Feldstein tells CNBC that “we’ll be lucky if by this time next year we see the economy having hit the bottom” and starting to reverse course.
• On the New York Times “Economix” blog, Glimp professor of economics Edward Glaeser argues for drastically downsizing the tax exemption for home-mortgage interest, equating the current policy to “encouraging Americans to bet everything on housing.”
• Writing in the New York Times, Beren professor of economics N. Gregory Mankiw explains why he believes Treasury Secretary Timothy Geithner should think twice before criticizing China’s manipulation of the yuan’s value; and
• Cabot professor of public policy Kenneth Rogoff (writing in the Wall Street Journal with Carmen Reinhart, a professor of economics at the University of Maryland) finds “stunning” parallels between the current situation in the United States and past financial crises in developed countries, and outlines the patterns that various indices (housing prices, unemployment, the stock market) might follow, using these past crises as a guide.