Tuesday, March 06, 2012 8:06pm

Bank Bailouts

Because the U.S. Treasury bailed out and backstopped banks (by injecting equity into them in late 2008, and later committing to provide public capital to any banks that failed the stress tests and could not raise private capital), the U.S. unemployment rate was lower at the end of 2010 than it would have been without these measures.

Responses
 

Source: IGM Economic Experts Panel
www.igmchicago.org/igm-economic-experts-panel

Responses weighted by each expert's confidence

Source: IGM Economic Experts Panel
www.igmchicago.org/igm-economic-experts-panel
Participant University Vote Confidence Comment Bio/Vote History
Acemoglu Daron Acemoglu MIT Uncertain 4
Bio/Vote History
         
Alesina Alberto Alesina Harvard Agree 3
Bio/Vote History
         
Altonji Joseph Altonji Yale Strongly Agree 8
Bio/Vote History
         
Auerbach Alan Auerbach Berkeley Agree 7
Bio/Vote History
         
Autor David Autor MIT Agree 7
Bio/Vote History
         
Baicker Katherine Baicker Harvard Agree 5
Bio/Vote History
         
Banerjee Abhijit Banerjee MIT --- ---
---
Bio/Vote History
Joined 11/2013 Strongly Agree 8
I think if banks had started failing the whole system would have gone into a tail spin. This is not to say that what they did was optimal.
 
Bertrand Marianne Bertrand Chicago Agree 3
Bio/Vote History
         
Brunnermeier Markus Brunnermeier Princeton --- ---
---
Bio/Vote History
Joined 11/2013 Strongly Agree 7
 
Chetty Raj Chetty Harvard Agree 6
Bio/Vote History
         
Chevalier Judith Chevalier Yale Agree 7
Bio/Vote History
         
Currie Janet Currie Princeton Agree 6
Bio/Vote History
         
Cutler David Cutler Harvard Agree 5
Bio/Vote History
         
Deaton Angus Deaton Princeton Agree 6
Bio/Vote History
         
Duffie Darrell Duffie Stanford Strongly Agree 9
Macro performance depends partly on credit from banks, which would have otherwise been impaired. Europe has a related growth issue now,
Bio/Vote History
         
Edlin Aaron Edlin Berkeley Did Not Answer
Bio/Vote History
         
Eichengreen Barry Eichengreen Berkeley Agree 5
Bio/Vote History
         
Einav Liran Einav Stanford --- ---
---
Bio/Vote History
Joined 11/2013 Agree 6
 
Fair Ray Fair Yale Agree 7
Bio/Vote History
         
Finkelstein Amy Finkelstein MIT --- ---
---
Bio/Vote History
Joined 11/2013 Agree 5
 
Goldberg Pinelopi Goldberg Yale Agree 6
If the banking system had collapsed, unemployment would certainly have been higher in 2010.
Bio/Vote History
         
Goldin Claudia Goldin Harvard Uncertain 2
Bio/Vote History
         
Goolsbee Austan Goolsbee Chicago Strongly Agree 10
the fact it was necessary doesn't mean we should be happy about it
Bio/Vote History
         
Greenstone Michael Greenstone Chicago Strongly Agree 7
There is some strong evidence that the lending channel is real. See the below link.
-see background information here
Bio/Vote History
         
Hall Robert Hall Stanford Agree 6
There were much better policies, but what was done was better than nothing, give the bad policies that preceded.
Bio/Vote History
         
Hart Oliver Hart Harvard --- ---
---
Bio/Vote History
Joined 11/2013 Uncertain 5
We do not know what would have happened without bail-outs. Using bankruptcy procedures the private sector might have recovered alone.
 
Holmström Bengt Holmström MIT Strongly Agree 9
Without Fed intervention the banking system would have collapsed.
Bio/Vote History
         
Hoxby Caroline Hoxby Stanford Did Not Answer
Bio/Vote History
         
Hoynes Hilary Hoynes Berkeley --- ---
---
Bio/Vote History
Joined 11/2013 Strongly Agree 8
 
Judd Kenneth Judd Stanford Did Not Answer
Bio/Vote History
         
Kaplan Steven Kaplan Chicago --- ---
---
Bio/Vote History
Joined 11/2013 Strongly Agree 10
 
Kashyap Anil Kashyap Chicago Strongly Agree 10
They could have been tougher on pay and dividends, but just look across the pond to see a much worse alternative way of proceeding.
Bio/Vote History
         
Klenow Pete Klenow Stanford Uncertain 3
The Fed would have purchased more private assets without TARP, and who knows what the Fed/Congress would have tried instead.
-see background information here
Bio/Vote History
         
Lazear Edward Lazear Stanford Did Not Answer
Bio/Vote History
         
Levin Jonathan Levin Stanford Did Not Answer
Bio/Vote History
         
Maskin Eric Maskin Harvard Agree 8
Bio/Vote History
         
Nordhaus William Nordhaus Yale Strongly Agree 8
Bio/Vote History
         
Obstfeld Maurice Obstfeld Berkeley Agree 4
This statement reflects my best judgment, based on a range of macroeconomic literature, but it would be difficult to prove beyond a doubt.
Bio/Vote History
         
Rouse Cecilia Rouse Princeton Agree 5
Bio/Vote History
         
Saez Emmanuel Saez Berkeley Strongly Agree 6
Bio/Vote History
         
Samuelson Larry Samuelson Yale --- ---
---
Bio/Vote History
Joined 11/2013 Agree 7
This still leave open the interesting but difficult question of (even approximately) optimal policy design.
 
Scheinkman José Scheinkman Princeton Did Not Answer
Bio/Vote History
         
Schmalensee Richard Schmalensee MIT Strongly Agree 8
It is hard to imagine the mess we would still be in if most of our large banks had failed.
Bio/Vote History
         
Shapiro Carl Shapiro Berkeley --- ---
---
Bio/Vote History
Joined 11/2013 Agree 7
Without some bailout, the financial system was in peril. Making the best of a very bad situation
 
Shimer Robert Shimer Chicago --- ---
---
Bio/Vote History
Joined 11/2013 Uncertain 1
 
Shin Hyun Song Shin Princeton Strongly Agree 9
Bio/Vote History
         
Stock James Stock Harvard Agree 7
Bio/Vote History
         
Stokey Nancy Stokey Chicago Strongly Agree 9
See Ch 7 of Friedman & Schwartz's Monetary History. It's fortunate we had a Central Banker who'd read it and had the courage to act on it.
Bio/Vote History
         
Thaler Richard Thaler Chicago Agree 3
Not my area but it seems like it had to have helped.
Bio/Vote History
         
Udry Christopher Udry Yale Agree 1
Bio/Vote History
         
Zingales Luigi Zingales Chicago Agree 5
The question presumes Paulson’s forced alternative. If the only choice is between evil and Armageddon, evil might look ok.
Bio/Vote History
         

10 New Economic Experts join the IGM Panel


For the past two years, our expert panelists have been informing the public about the extent to which economists agree or disagree on important public policy issues. This week, we are delighted to announce that we are expanding the IGM Economic Experts Panel to add ten new distinguished economists. Like our other experts, these new panelists have impeccable qualifications to speak on public policy matters, and their names will be familiar to other economists and the media.

To give the public a broad sense of their views on policy issues, each new expert has responded to a selection of 16 statements that our panel had previously addressed. We chose these 16 statements, which cover a wide range of important policy areas, because the original panelists' responses to them were analyzed in a paper comparing the views of our economic experts with those of the American public. You can find that paper, by Paola Sapienza and Luigi Zingales, here. The paper, along with other analyses of the experts' views, was discussed during the American Economic Association annual meetings, and the video can be found here.

The new panelists' responses to these statements can be seen on their individual voting history pages. Our ten new economic experts are:

Abhijit Banerjee (MIT)
Markus K. Brunnermeier (Princeton)
Liran Einav (Stanford)
Amy Finkelstein (MIT)
Oliver Hart (Harvard)
Hilary Hoynes (Berkeley)
Steven N. Kaplan (Chicago)
Larry Samuelson (Yale)
Carl Shapiro (Berkeley)
Robert Shimer (Chicago)


Please note that, for the 16 previous topics on which these new panelists have voted, we left the charts showing the distribution of responses unchanged. Those charts reflect the responses that our original panelists gave at the time, and we have not altered them to reflect the views of the new experts.

We have also taken this opportunity to ask our original panelists whether they would vote differently on any of the statements we have asked about in the past. Several experts chose to highlight statements to which they would currently respond differently. In such cases, you will see this "revote" below the panelist's original vote. We think you will enjoy seeing examples of statements on which some experts have reconsidered.

As with the 16 previous statements voted on by new panelists, these "revote" responses are not reflected in the chart that we display showing the distribution of views for that topic: all the charts for previous questions reflect the distribution of views that the experts expressed when the statement was originally posed.

About the IGM Economic Experts Panel

This panel explores the extent to which economists agree or disagree on major public policy issues. To assess such beliefs we assembled this panel of expert economists. Statistics teaches that a sample of (say) 40 opinions will be adequate to reflect a broader population if the sample is representative of that population.

To that end, our panel was chosen to include distinguished experts with a keen interest in public policy from the major areas of economics, to be geographically diverse, and to include Democrats, Republicans and Independents as well as older and younger scholars. The panel members are all senior faculty at the most elite research universities in the United States. The panel includes Nobel Laureates, John Bates Clark Medalists, fellows of the Econometric society, past Presidents of both the American Economics Association and American Finance Association, past Democratic and Republican members of the President's Council of Economics, and past and current editors of the leading journals in the profession. This selection process has the advantage of not only providing a set of panelists whose names will be familiar to other economists and the media, but also delivers a group with impeccable qualifications to speak on public policy matters.

Finally, it is important to explain one aspect of our voting process. In some instances a panelist may neither agree nor disagree with a statement, and there can be two very different reasons for this. One case occurs when an economist is an expert on a topic and yet sees the evidence on the exact claim at hand as ambiguous. In such cases our panelists vote "uncertain". A second case relates to statements on topics so far removed from the economist's expertise that he or she feels unqualified to vote. In this case, our panelists vote "no opinion".

The Economic Experts Panel questions are emailed individually to the members of the panel, and each responds electronically at his or her convenience. Panelists may consult whatever resources they like before answering.

Members of the public are free to suggest questions (see link below), and the panelists suggest many themselves. Members of the IGM faculty are responsible for deciding the final version of each week’s question. We usually send a draft of the question to the panel in advance, and invite them to point out problems with the wording if they see any. In response, we typically receive a handful of suggested clarifications from individual experts. This process helps us to spot inconsistencies, and to reduce vagueness or problems of interpretation.

The panel data are copyrighted by the Initiative on Global Markets and are being analyzed for an article to appear in a leading peer-reviewed journal.

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