BOOKS BY ROBERT J. SHILLER

Squam Lake Report

Finance and the Good Society
Princeton University Press, April 2012, 280 pp.

The reputation of the financial industry could hardly be worse than it is today in the painful aftermath of the 2008 financial crisis. New York Times best-selling economist Robert Shiller is no apologist for the sins of finance — he is probably the only person to have predicted both the stock market bubble of 2000 and the real estate bubble that led up to the subprime mortgage meltdown. But in this important and timely book, Shiller argues that, rather than condemning finance, we need to reclaim it for the common good. He makes a powerful case for recognizing that finance, far from being a parasite on society, is one of the most powerful tools we have for solving our common problems and increasing the general well-being. We need more financial innovation — not less — and finance should play a larger role in helping society achieve its goals. Challenging the public and its leaders to rethink finance and its role in society, Shiller argues that finance should be defined not merely as the manipulation of money or the management of risk but as the stewardship of society's assets. He explains how people in financial careers — from CEO, investment manager, and banker to insurer, lawyer, and regulator — can and do manage, protect, and increase these assets. He describes how finance has historically contributed to the good of society through inventions such as insurance, mortgages, savings accounts, and pensions, and argues that we need to envision new ways to rechannel financial creativity to benefit society as a whole. Ultimately, Shiller shows how society can once again harness the power of finance for the greater good.

Translations:
Chinese: CITIC
Croatian: Mate Publishers
German: Campus Verlag
Italian: Il Mulino
Japanese: Toyo Keizai
Korean: Random House Korea
Portuguese: Editora Campus
Spanish: Gestion 2000 (Planeta)


Reforming US Financial Markets

Reforming US Financial Markets: Reflections Before and Beyond Dodd-Frank
MIT Press, 2011, 152 pp.

with Randall Kroszner

Over the last few years, the financial sector has experienced its worst crisis since the 1930s. The collapse of major firms, the decline in asset values, the interruption of credit flows, the loss of confidence in firms and credit market instruments, the intervention by governments and central banks: all were extraordinary in scale and scope. In this book, leading economists Randall Kroszner and Robert Shiller discuss what the United States should do to prevent another such financial meltdown. Their discussion goes beyond the nuts and bolts of legislative and regulatory fixes to consider fundamental changes in our financial arrangements. Kroszner and Shiller offer two distinctive approaches to financial reform, with Kroszner providing a systematic analysis of regulatory gaps and Shiller addressing the broader concerns of democratizing and humanizing finance. Kroszner focuses on key areas for reform, including credit rating agencies and the mortgage securitization market. Shiller argues that reform must serve to make the full power of financial theory work for everyone — bringing the technology of finance to bear on managing risk, for example — and should acknowledge the reality of human nature. After brief discussions by four commentators, Kroszner and Shiller each offer a response to the other’s proposals, creating a fruitful dialogue between two major figures in the field.


Squam Lake Report

The Squam Lake Report: Fixing the Financial Markets
Princeton University Press, June 2010, 168 pp.

with Kenneth R. French, Martin N. Baily, John Y. Campbell, John H. Cochrane, Douglas W. Diamond, Darell Duffie, Anil Kashyap, Frederic Mishkin, Raghuram Rajan, David S. Scharfstein, Hyun Song Shin, Matthew J. Slaughter, Jeremy C. Stein, and Rene M. Stulz

In the fall of 2008, fifteen of the world's leading economists--representing the broadest spectrum of economic opinion--gathered at New Hampshire's Squam Lake. Their goal: the mapping of a long-term plan for financial regulation reform. The Squam Lake Report distills the wealth of insights from the ongoing collaboration that began at these meetings and provides a revelatory, unified, and coherent voice for fixing our troubled and damaged financial markets.


Animal Spirits

Animal Spirits: How Human Psychology Drives the Economy
And Why It Matters for Global Capitalism

Princeton University Press, March 2009, 264 pp.

with George Akerlof

The global financial crisis has made it painfully clear that powerful psychological forces are imperiling the wealth of nations today. From blind faith in ever-rising housing prices to plummeting confidence in capital markets, "animal spirits" are driving financial events worldwide. In this book, acclaimed economists George Akerlof and Robert Shiller challenge the economic wisdom that got us into this mess, and put forward a bold new vision that will transform economics and restore prosperity.

Akerlof and Shiller reassert the necessity of an active government role in economic policymaking by recovering the idea of animal spirits, a term John Maynard Keynes used to describe the gloom and despondence that led to the Great Depression and the changing psychology that accompanied recovery. Like Keynes, Akerlof and Shiller know that managing these animal spirits requires the steady hand of government — simply allowing markets to work won't do it. In rebuilding the case for a more robust, behaviorally informed Keynesianism, they detail the most pervasive effects of animal spirits in contemporary economic life — such as confidence, fear, bad faith, corruption, a concern for fairness, and the stories we tell ourselves about our economic fortunes — and show how Reaganomics, Thatcherism, and the rational expectations revolution failed to account for them.

Other Editions:
Kindle (Amazon.com electronic book)
Audible.com (Brilliance Audio)

Translations:
Chinese (simplified): CITIC
Chinese (complex): Commonwealth Publishing
Czech: Dokoran
Dutch: Business Contact
Finnish: Helsinki University Press
French: Pearson France
German: Campus Verlag
Hungarian: Corvina Publisher
Italian: Rizzoli
Japanese: Toyo Kezai
Korean: Random House Korea, Inc
Macedonian and Albanian: Ars Lamina
Polish: Studio Emka
Portuguese (Brazil): Agencia RIFF
Portuguese (Portugal): Grupo Editorial Campus
Romanian: Publica
Russian: United Press (Alpina imprint)
Serbian: Sluzhbeni Glasnik
Spanish: Gestion 2000, Spain
Thai: Matichon Publishing House
Turkish: Scala Yayincilik


Subprime Solution

Subprime Solution: How Today’s Global Financial Crisis
Happened and What to Do about It

Princeton University Press, September 2008, 208 pp.

The subprime mortgage crisis has already wreaked havoc on the lives of millions of people and now it threatens to derail the U.S. economy and economies around the world. In this trenchant book, best-selling economist Robert Shiller reveals the origins of this crisis and puts forward bold measures to solve it. He calls for an aggressive response — a restructuring of the institutional foundations of the financial system that will not only allow people once again to buy and sell homes with confidence, but will create the conditions for greater prosperity in America and throughout the deeply interconnected world economy.

Shiller blames the subprime crisis on the irrational exuberance that drove the economy's two most recent bubbles — in stocks in the 1990s and in housing between 2000 and 2007. He shows how these bubbles led to the dangerous overextension of credit now resulting in foreclosures, bankruptcies, and write-offs, as well as a global credit crunch. To restore confidence in the markets, Shiller argues, bailouts are needed in the short run. But he insists that these bailouts must be targeted at low-income victims of subprime deals. In the longer term, the subprime solution will require leaders to revamp the financial framework by deploying an ambitious package of initiatives to inhibit the formation of bubbles and limit risks, including better financial information; simplified legal contracts and regulations; expanded markets for managing risks; home equity insurance policies; income-linked home loans; and new measures to protect consumers against hidden inflationary effects.

Other Editions:
Kindle (Amazon.com electronic book)
I-tunes (Audio edition)

Translations:
Chinese CITIC
German: Boersenmedien AG
Italian: EGEA S.p.A. Milano
Korean: Random House Korea, Inc
Portuguese: Ana Paula Faria Editora, Portugal
Spanish Gestion 2000 (Grupo Planeta), Spain


The New Financial Order

The New Financial Order: Risk in the 21st Century
Princeton University Press, April 2003, 400 pp.

In his best-selling Irrational Exuberance, Robert Shiller cautioned that society's obsession with the stock market was fueling the volatility that has since made a roller coaster of the financial system. Less noted was Shiller's admonition that our infatuation with the stock market distracts us from more durable economic prospects. These lie in the hidden potential of real assets, such as income from our livelihoods and homes. But these ''ordinary riches,'' so fundamental to our well-being, are increasingly exposed to the pervasive risks of a rapidly changing global economy. This compelling and important new book presents a fresh vision for hedging risk and securing our economic future.

Shiller describes six fundamental ideas for using modern information technology and advanced financial theory to temper basic risks that have been ignored by risk management institutions — risks to the value of our jobs and our homes, to the vitality of our communities, and to the very stability of national economies. Informed by a comprehensive risk information database, this new financial order would include global markets for trading risks and exploiting myriad new financial opportunities, from inequality insurance to intergenerational social security. Just as developments in insuring risks to life, health, and catastrophe have given us a quality of life unimaginable a century ago, so Shiller's plan for securing crucial assets promises to substantially enrich our condition.

Once again providing an enormous service, Shiller gives us a powerful means to convert our ordinary riches into a level of economic security, equity, and growth never before seen. And once again, what Robert Shiller says should be read and heeded by anyone with a stake in the economy.

Translations:
Chinese simplified characters: Chinese People's University Press/Liang Jing Publishing Studio, China
Chinese complex characters: China Times Publishing Company, Taiwan
German: Campus Verlag, Germany
Italian: Il Sole 24 Ore, Italy
Japanese: Nikkei, Japan
Korean: Min Media, Korea
Spanish: Turner Publications Spain/Oceana Mexico


Irrational Exuberance 2000
Hardcover, Princeton University Press, 2000
Irrational Exuberance 2001
Paperback, Broadway
Books, 2001

Irrational Exuberance
Princeton University Press, March 2000 (paperback Broadway Books, April 2001)
2nd Edition: Princeton University Press, 2005 (paperback Currency/Doublday 2006)

This first edition of this book was a broad study, drawing on a wide range of published research and historical evidence, of the enormous stock market boom that started around 1982 and picked up incredible speed after 1995. Although it took as its specific starting point this ongoing boom, it placed it in the context of stock market booms generally, and it also made concrete suggestions regarding policy changes that should be initiated in response to this and other such booms. The book argued that the boom represents a speculative bubble, not grounded in sensible economic fundamentals.   Part one of the book considered structural factors behind the boom. A list of twelve precipitating factors that appear to be its ultimate causes was given. Amplification mechanisms, naturally-occurring Ponzi processes, that enlarge the effects of these precipitating factors, were described. Part Two discussed cultural factors, the effects of the news media, and of "new era" economic thinking. Part Three discussed psychological factors, psychological anchors for the market and herd behavior. Part Four discussed attempts to rationalize exuberance: efficient markets theory and theories that investors are learning. Part Five presented policy options and actions that should be taken. Hardcover 296 pages, paperback 304 pages.

The second edition, 2005, added an analysis of the real estate bubble as similar to the stock market bubble that preceded it, and warned that "Significant further rises in these markets could lead, eventually, to even more significant declines. The bad outcome could be that eventual declines would result in a substantial increase in the rate of personal bankruptcies, which could lead to a secondary string of bankruptcies of financial institutions as well. Another long-run consequence could be a decline in consumer and business confidence, and another, possibly worldwide, recession." Thus, the second edition of this book was among the first to warn of the global financial crisis that began with the subprime mortgage debacle in 2007.

Contents, Preface and Sample Chapter and Online Data.

Stock market data used in this book: Excel file (.xls), Housing market data used in this book: Excel file (.xls).

Other Editions:
Scribe Publications paperback 2000 (Australia and New Zealand)
Princeton University Press paperback 2001 (UK only)
Audible.com, audio edition 2000
New Age International (P) Limited Publishers, for India, Bangladesh, Bhutan, Myanmar, Sri Lanka, Nepal and Pakistan

Translations:
Arabic: Obeikan Publishers, Saudi Arabia
Chinese (simplified characters): Chinese People's University Press, China/Liang Jing Publishing Studio
Chinese (complex characters): China Times Publishers, Taiwan
Czech: Grada Publishing French: Valor editions, France
German: Campus Verlag, Germany
Greek: Livanis Publications, Greece
Hungarian: Alinea, Hungary
Italian: Il Mulino, Italy
Korean: Maeil Business Newspapers, Korea
Japanese: Diamond, Japan
Macedonian: Securities and Exchange Commission, Macedonia
Portuguese: Makron, Brazil
Russian: Alpina Non-Fiction
Spanish (Mexico): Turner Publications/Oceana
Spanish (Spain): Expansion, Kiosk Edition
Turkish: Rota Publishers, Turkey


Macro Markets (hardcover)
Hardcover, Oxford
University Press, 1993

Macro Markets: Creating Institutions for Managing Society's Largest Economic Risks
Oxford University Press, 1993

It is proposed that a new class of markets, macro markets, markets for claims on aggregate income and service flows, be established. These markets would help people to manage the biggest economic risks facing society. Our existing financial markets are inadequate to deal with such risks. Our stock markets are markets for claims on corporate dividends, and yet the latter are only a few percent of national incomes, only 3 percent in the United States. The proposal here is to establish liquid international markets for claims on the other 97 percent. These would include markets for national incomes, components and aggregates of national incomes, and real estate. Establishing such unprecedented new markets presents some technical problesm which this book attempts to solve. There are proposals for perpetual futures market design, and for new index number construction methods for cash settlement of contracts. [254 pages]

Contents: 1. Introduction, 2. Psychological Barriers, 3. Mechanisms for Hedging Long Streams of Income, 4. National Income and Labor Income Markets, 5. Real Estate and Other Markets, 6. The Construction of Index Numbers for Contract Settlement, 7. Index Numbers: Issues and Alternatives, 8. The Problem of Index Revisions, 9. Making It Happen, Notes, References, Index

Available on Oxford Scholarship Online

Translations:
Chinese Simplified Characters: Academic Works in Economics Series, Oxford University Press, United Kingdom


Who's Minding the Store?
Paperback, The Century Foundation (formerly Twentieth Century Fund) and Brookings Institution, 1992

Who's Minding the Store?
The Century Foundation, 1992

Managers of firms whose shares are traded find themselves operating under wrong incentives (making decisions in light of anticipated effects on the market rather than the true value of their company) and securities' values are often removed from their true value, causing costly and unnecessary disruptions in the economy. But it appears to be impossible to tax or otherwise discourage harmful speculative behavior directly. Policy measures to reduce excessive speculative behavior might include encouraging long-term relationship investing by institutions, bonus incentive systems for managers tied to longer term returns on stock, and occasional efforts by the Federal Reserve to stabilize the stock market through monetary policy or margin requirements. [142 pages]

Contents: [Foreword by Richard C. Leone, Report of the Task Force, Dissent by James Tobin, Comment by Horace DePodwin], Who's Minding the Store: 1. Speculation and Market Volatility, 2. Recent Concerns and Policy Proposals, 3. Speculation and Economic Theory, 4. Today's Concerns with Speculative Behavior, 5. Measures for Dealing with Speculation and Short-Termism, 6. Discount Rates and Saving Rates, 7. Conclusion: Sorting Through an Array of Policy Options Notes, References, Index


Market Volatility

Market Volatility
(ISBN 0-262-69151-5, $22.00), MIT Press, Cambridge MA, 1989.

The origins of price movements are poorly known in all speculative markets: markets for corporate stocks, bonds, homes, land, commercial structures, commodities, collectables, and foreign exchange. Why do stock prices often change up or down 20% in a year's time? Why do long term bond prices sometimes change up or down as much? Why do we sometimes find "hot" markets for homes, with prices sometimes jumping or more 20% in a year, after years of stable prices? The book presents basic research on the ultimate causes of price volatility in speculative markets, on the causes that make good economic sense and on the causes that are psychological or sociological in origin. The research, conducted over the last dozen years, includes both my own work and joint research with John Y. Campbell, Karl E. Case, Sanford J. Grossman, and Jeremy J. Siegel. About two thirds of the book consists of previously published articles. [464 pages] Chapter 26 and Online Data

Contents:  Introduction, 1. Stock Prices and Social Dynamics, 2. Fashions, Fads and Bubbles in Financial Markets, 3.The Stock Market: Overview, 4. Stock Market Volatility, An Introductory Survey, 5. Do Stock Prices Move Too Much to be Justified by Subsequent Changes in Dividends, 6. The Use of Volatility Measures in Assessing Market Efficiency, 7. The Probability of Gross Violations of a Present Value Variance Inequality, 8. Stock Prices, Earnings, and Expected Dividends, 9. The Dividend-Ratio Model and Expected Dividends, 10. Comovements in Stock Prices and Comovements in Dividends, 11. Factors and Fundamentals, 12. The Bond Market: Overview, 13. Bond Market Volatility: An Introductory Suvery, 14. The Gibson Paradox and Historical Movements in Long-Term Interest Rates, 15. The Volatility of Long-Term Interest Rates and Expectations Models of the Term Structure, 16. Cointegration and Tests of Present Value Models, 17. The Real Estate Market: Overview, 18. The Efficiency of the Market for Single Family Homes, 19. The Aggregate Economy, Overview, 20. Ultimate Sources of Aggregate Variability, 21 The Determinants of the Variability of Stock Market Prices, 22. Popular Models and Investor Behavior, Overview, 23. Investor Behavior in the October 1987 Stock Market Crash: Survey Evidence, 24. The Behavior of Home Buyers in Boom and Post-Boom Markets, 25. Concluding Notes, 26, Data Series, Author Index, Subject Index

Translations:
Chinese: Chinese People's University Press, China

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