About the project

During the Global Financial Crisis, nations around the world attempted hundreds of interventions, only a fraction of which have been studied by researchers. Most research on past crises has been focused on macroeconomic issues, with much less attention paid to the mechanics and tools of crisis-fighting. To fill this gap, the Yale Program on Financial Stability at the Yale School of Management launched the New Bagehot Project in 2017 with the generous support of our funders.

The New Bagehot Project was named in honor of Walter Bagehot, the author of Lombard Street (1873), still considered the seminal text on crisis-fighting. Bagehot’s advice for central bankers in a crisis can be summarized as “lend freely at a penalty rate against good collateral.” This advice is still considered near-gospel by many central bankers, but it is insufficient to guide the complex policy actions necessary to stabilize a 21st-century financial system. The New Bagehot Project aims to expand the crisis-fighting playbook through detailed case studies of specific interventions, synthesizing these case studies into best practices, and then presenting this synthesis across a variety of media.

We are producing three main types of material for the New Bagehot Project—“Case Studies,” “Lessons Learned,” and “Surveys.” Case Studies are standardized-template studies of specific policy interventions. The template is a key part of our project’s design; for example, all Case Studies within a specific theme will have the same categories of “key design decisions,” allowing for easy comparison across interventions and quick support for training and decision-making.

Case Studies are written by YPFS staff from an objective, “just-the-facts” point of view. The goal is to provide both an overview of the intervention (from the text) and sufficient details on the implementation (from linked documents) so that the Case Study can be useful at multiple levels of analysis. In contrast, “Lessons Learned” (LLs) are explicitly subjective views of crisis fighting. Each LL is generated from the perspective of an active participant in some aspect of a past crisis, based on an interview with the subject and distilling key points into specific conclusions. Most interview subjects are policymakers involved in designing or implementing specific interventions. Sometimes, the subject is a market participant affected by government policy. In all cases, a LL is written from the perspective of that individual actor, attempting to give advice to future policymakers.

“Surveys” are framing essays that attempt to synthesize and draw lessons from a thematic collection of Case Studies and Lessons Learned. The themes of these Surveys are major categories of interventions such as “Broad-Based Emergency-Lending Programs” or “Market Support Programs.” Surveys organize and analyze the key design decisions from a large group of Case Studies and LLs fitting that theme. Here, the standard template of the Case Studies plays an important role, as the Surveys will focus on explaining why these design decisions (and not others) are defined as “key” and then evaluate the costs and benefits of the different choices made. The Survey style is more positive than prescriptive, aiming to summarize all the available evidence on each class of intervention, pointing out specific design choices that seem interesting or cautionary.

We ensure the analytical quality and historical accuracy of our outputs by actively seeking feedback from our community of intended users throughout the process of developing our materials. Whenever possible, we reach out to the architects of interventions to ask questions, request comments on preliminary drafts, and check our facts. Additionally, our online platform design includes an “invited commenting” feature that enables designated users to provide feedback on the documents that we produce.

How can the materials of the New Bagehot Project be used? Two ways: for advanced preparation before a crisis strikes and for crisis-time decision support. We offer three components for  training: (1) high-level workshops, with both online and in-person components, culminating on campus at Yale in the Systemic Risk Institute each summer; (2) with graduates of these high-level programs bringing the training in-house to their institutions; and (3) via online availability of all Project materials and self-paced learning programs.

The in-crisis usefulness of New Bagehot is more ambitious and uncertain. We do not expect policymakers to have time for long slogs through materials in the midst of a crisis. Instead, we hope that enough policy designers will have gone through advance training so that they can quickly find whatever information they need. To ensure this, we are working to design the online interface to be as user-friendly as possible for a time-crunched decision-maker, and we welcome all feedback from the community on how to do this better.

The New Bagehot Project is an initiative of the Yale Program on Financial Stability at the Yale School of Management. YPFS invites institutions responsible for crisis management to partner with us to contribute their knowledge and expertise to the New Bagehot Project. To receive more information about partnering with YPFS, email Christian McNamara.