The recent financial turmoil highlights the incentive of highly leveraged financial institutions to take excessive risk, given the protection of limited liability. During the nineteenth and early twentieth century, many banks operated under liability rules which obligated shareholders to bear...

We focus on two international aspects of the Great Depression--financial crises and international trade—and try to discern lessons for the current economic crisis. Both downturns featured global banking crises which were generated by boom-slump macroeconomic cycles. During both crises, world...

We focus on two international aspects of the Great Depression--financial crises and international trade--and try to discern lessons for the current economic crisis. Both downturns featured global banking crises which were generated by boom--slump macroeconomic cycles. During both crises, world...

In recent years, the world has been rocked by major economic crises, most notably the devastating collapse of Lehman Brothers, the largest bankruptcy in American history, which triggered the breathtakingly destructive sub-prime disaster. What sparks these vast economic calamities? Why do our...