Solving the present crisis and managing the leverage cycle

Abstract

Yale University professor John Geanakoplos discusses implications of “the leverage cycle”—a phenomenon in which leverage is excessive prior to a financial crisis and unacceptably low during the crisis—for regulatory policy and reform. Presented as the keynote address at "Central Bank Liquidity Tools and Perspectives on Regulatory Reform" a conference sponsored by the Federal Reserve Bank of New York, February 19-20, 2009.Financial market regulatory reform ; Assets (Accounting) ; Investments ; Equilibrium (Economics) ; Financial crises ; Housing - Prices ; Swaps (Finance) ; Default (Finance) ; Uncertainty ; Federal Reserve System