August 2019
The financial crises of the last twenty years brought new economic concepts into classrooms discussions. This article introduces undergraduate students and teachers to seven of these models: (i) misallocation of capital inflows; (ii) modern and shadow banks; (iii) strategic complementarities and amplification; (iv) debt contracts and the distinction between solvency and liquidity; (v) the diabolic loop; (vi) regional flights to safety; and (vii) unconventional monetary policy. We apply each of them to provide a full account of the euro crisis of 2010-12.