What to Read on the Financial Crisis, Part III: Scholarly

Previously I’ve offered suggested readings for understanding the financial crisis.  Part II focused on “popular” works.  What follows is my list of suggested books, written mostly by academics, that give a more scholarly analysis of the crisis.  Also see my Part I.  They are, by definition, less accessible than the popular works, but they do generally offer consistent frameworks for understanding the crisis and rely more on explaining underlying forces, rather than focus on individuals.  All of these are also written for general audiences.  Again this is a highly selective list based upon the writings I’ve found insightful.

1. Getting Off Track, by John Taylor. (4 stars) Short and focused on role of monetary policy in driving housing bubble. While incomplete, a must-read.

2. The Rise and Fall of US Mortgage and Credit Markets, by James Barth. (4 stars) No better single source of data on U.S. mortgage markets and their connection to the crisis. Great reference, a book I come back to repeatedly.

3. This Time is Different, by Carmen Reinhart and Kennethy Rogoff. (5 stars) Read now, do not delay.

4. Fault Lines, by Raghuran Rajan. (4 stars) Solid analysis of the bubble and its political economy. Weak when he ventures into “safety net” discussions, but still a great read.

5. What Caused the Financial Crisis, edited by Jeff Friedman. (4 stars) A collection of essays by different scholars (from John Taylor to Joe Stiglitz). Editor’s intro/overview alone is worth the price of the book.

6.  A Call For Judgment, by Amar Bhide. (3 stars) More a corporate finance take on the crisis, interesting and unique read, but also narrowly focused.

7. A Failure of Capitalism, by Richard Posner. (1 star) One of the least original books from one of the most original thinkers.  Reminds you that Posner is at heart a micro guy, way off when it comes to macroeconomics (and finance). Skip this one.

8. The Origin of Financial Crises, by George Cooper. (3 stars) Brief and insightful take, focused on monetary and credit policy. Far from only thing you should read, but worthwhile addition.

9. Financial Fiasco, by Johan Norberg. Published by Cato, written by Cato scholar, what more do I need to say.

10. Too Big to Save? by Robert Pozen. (4 stars)  Scholarly take from a major player in the financial markets. Somewhat best of both worlds. Lots of useful data.

11. Subprime Solution, by Robert Shiller. (3 stars) Policy solutions don’t really flow from the analysis, but Shiller’s insights into bubbles are always interesting.

12. The Housing Boom and Bust, by Thomas Sowell. (3 Stars) Breezy read from ever entertaining Sowell, but also far too narrow in focus to serve as a primary source.

13. Slapped by the Invisible Hand, Gary Gorton. (3 stars) Too narrow a focus on “shadow banking” but also no better analysis of its role. So if you are going to read several, add this one.

14. Guaranteed to Fail, various NYU professors. (3 stars) Good data and analysis of our mortgage finance system and its role in the crisis.

There are way too many great journal articles to mention, most of which aren’t accessible to the lay reader, but several recent issues of the Journal of Economic Perspectives have contained great reading material on the crisis.  Some of these articles are free for download (others are not).