Deciphering the Liquidity and Credit Crunch 2007-08

Markus K. Brunnermeier

NBER Working Paper No. 14612
Issued in December 2008
NBER Program(s):   AP   CF   EFG   IFM   ME

This paper summarizes and explains the main events of the liquidity and credit crunch in 2007-08. Starting with the trends leading up to the crisis, I explain how these events unfolded and how four different amplification mechanisms magnified losses in the mortgage market into large dislocations and turmoil in financial markets.

(404 K)

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Published: Markus K. Brunnermeier, 2009. "Deciphering the Liquidity and Credit Crunch 2007-2008," Journal of Economic Perspectives, American Economic Association, vol. 23(1), pages 77-100, Winter.

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Acknowledgments

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