Reinhart and rogoff 2008 pdf

The weight of the evidence indicates that high debt slows growth, but there is no magic threshold above which any country at any time will experience slower growth. Growth in a time of debt american economic association. A panoramic view of eight centuries of financial crises carmen m. Rogoff, harvard university and nber abstract this paper offers a panoramic analysis of the history of financial crises dating.

Harvard university economists carmen reinhart and kenneth rogoff have acknowledged making a spreadsheet calculation mistake in a 2010 research paper, growth in a time of debt pdf. Reinhart, university of maryland and nber kenneth s. Data for ilzetzki, reinhart, and rogoff 2018, exchange arrangements entering the 21st century. Part of the costs of these crises owes to the protracted nature of recovery. Carmen reinhart, peterson institute for international economics, nber.

Use features like bookmarks, note taking and highlighting while reading this time is different. Politicians, commentators, and activists widely cited the paper in political debates over the effectiveness of austerity in fiscal policy for debtburdened. The ones marked may be different from the article in the profile. An international historical comparison article begins on next page the harvard community has made this article openly available. The aftermath of financial crises american economic association. He studied 800 years of crises with fellow economist carmen reinhart. This paper offers a panoramic analysis of the history of financial crises dating from englands fourteenthcentury default to the current united states subprime financial crisis. World aggregate, 1900 2008 a composite index of banking, currency, sovereign default and, inflation crises, and stock market crashes weighted by their. Fellow economist alan blinder credits both reinhart and kenneth rogoff with describing highly relevant aspects of the 2008 financial institution nearmeltdown and resulting serious recession.

Introduction public debts in the advanced economies have surged in recent years to levels that have not been recorded since the end of world war ii. The duration of the average debt overhang episode is perhaps its most striking feature. Fellow economist alan blinder credits both rogoff and carmen reinhart with describing highly relevant aspects of the 2008 financial institution nearmeltdown and resulting serious recession in a normal recession such as 1991 or 2000, the keynesian tools of tax cuts and infrastructure spending fiscal stimulus, as well as lowered interest rates monetary stimulus, will. Ghosh january 2015 abstract high public debt often produces the drama of default and restructuring. Common sequencing patterns in financial crises we document that the global scope and depth of the crisis the began with the collapse of the subprime mortgage market in the summer of 2007 is unprecedented in the post world war ii era and, as such, the most relevant. The aftermath of financial crises by carmen reinhart. Reinhart and rogoff 2008, 2009a, sources cited therein, and authors calculations. Understanding the 20072008 global financial crisis. Debt and growth in a time of controversy the heritage. Probability of a banking crisis in percent, 66country sample conditional on a bonanza 3year window 18. An important book that will affect policy discussions for a long time to come, this time is different exposes centuries of financial missteps.

Reinhart, rogoff, and savastano 2003a, updated based on international monetary fund, world economic outlook. Section ii summarizes highlights from a first view of the extended dataset, with special reference to the current conjuncture. Peterson institute for international economics, harvard university department of economics and monetary and capital markets departrment. Reinhart and reinhart 2008, based on tables 2 and 4 and authors calculations. Secular stagnation, debt overhang and other rationales for. Reinhart, rogoff, and the excel error that changed. The extended data set catalogues banking and financial crises around the entire world dating back to 1800 in some cases earlier. Reinhart and rogoff 2008a included all the major postwar banking crises in the developed world a total of 18 and put particular emphasis on the ones dubbed the big five spain 1977, norway 1987, finland, 1991, sweden, 1991, and japan, 1992. American economic association is the 2007 us subprime financial crisis so different. It also generated a collapse of international trade more severe than any since the 1930s, and a broader economic downturn that involved all regions of the globe. This cited by count includes citations to the following articles in scholar. The identified crisis episodes align well with a purely empirical notion of financial crisis in mexico reinhart and rogoff, 2009 and display duration about twice as long as the crisis peaks. As one critical case in point, referring to the data from rr that we show in table 1.

Reinhart and rogoff 2008b and sources cited therein. Is the 2007 us subprime financial crisis so different. Surges in central government public debts and their resolution. Previously, she was the dennis weatherstone senior fellow at the peterson institute for international economics. Rogoff newly developed historical time series on public debt, along with data on external debts, allow a deeper analysis of the debt cycles underlying serial debt and banking crises. As far as i recall, neither reinhart nor rogoff objected to osbornes speech, or to the citing of their work by other austerityminded politicians, such as paul ryan and olli rehn, the euro zone. The reinhartrogoff error or how not to excel at economics. After listening to economists discuss the crisis during a tour of the london school of economics in november 2008, queen.

The aftermath of financial crises by carmen reinhart, kenneth. A panoramic view of eight centuries of financial crises. Consumer price indices are used to deflate nominal house prices. Reinhart page 6 publications ilzetzki, ethan, carmen m. The data our comparisons employ a small piece of a much larger and longer historical dataset we have constructed see reinhart and rogoff 2008. For example, it constitutes roughly 10% of the us federal reserves main monetary aggregate, m2. Our results incorporate data on 44 countries spanning about 200 years. Belen sbrancia authorized for distribution by atish r. Prior to this dataset, it was exceedingly difficult to get more than two or three decades of public debt data even for many rich countries, and virtually impossible for most emerging markets. Discussion of qian, reinhart, and rogoffs on graduation.

For the ongoing episodes, the calculations are based on data through the following periods. Among the 26 episodes we identify, 20 lasted more than a decade. Does high public debt consistently stifle economic growth. Eight centuries of financial folly kindle edition by reinhart, carmen m. From financial crash to debt crisis scholars at harvard. Eight centuries of financial folly is one of the best, if not the best, books ever written on the history of financial crises. Some lessons learned and those forgotten1 prepared by carmen m. E31,e4,e6,f3,f4,h6,n10 abstract historically, periods of high indebtedness have been associated with a rising incidence of default or restructuring of public and private debts. Consistent with reinhart and rogoff 2010 and most of the more recent research, we find that public debt overhang episodes are associated with lower growth than during other periods. E6,f3,n0 abstract there is a rich scholarly literature on sovereign default on external debt. Harvard economist kenneth rogoff knows what a financial crisis looks like. Fellow economist alan blinder credits both rogoff and carmen reinhart with describing highly relevant aspects of the 2008 financial institution nearmeltdown and resulting serious recession. While countries do weather their financial storms, reinhart and rogoff prove that short memories make it all too easy for crises to recur. E32,e44,f44,g01,n10,n20 abstract we examine the evolution of real per capita gdp around 100 systemic banking crises.

In order to focus here on data most relevant to present u. Apr 26, 20 as far as i recall, neither reinhart nor rogoff objected to osbornes speech, or to the citing of their work by other austerityminded politicians, such as paul ryan and olli rehn, the euro zone. Reinhart and rogoff present a sobering reminder that financial crises are a serial phenomenoncaused in no small part by the seductive thistimeisdifferent syndrome, the prevalent belief that to us, here and now, old economic laws of motion no longer apply. Critique of reinhart and rogoff page 3 of 23 their long historical time period, 17902009. This paper examines the depth and duration of the slump that invariably follows severe financial crises, which tend to be protracted affairs. In late 2008, they were the first ones to document the. This time is different, an update update on carmen m. The definition states that when the banking sector is exposed by public intervention, bankruptcy, merging of financial institutions or significant decline in deposits, a financial crisis is apparent. Discussion of qian, reinhart, and rogoff s on graduation from default, in. No 882, nber working papers from national bureau of economic research, inc abstract.

Rogoff especially against the backdrop of graying pop. Prior to this dataset, it was exceedingly difficult. Dec 08, 2016 reinhart, carmen and rogoff, kenneth s. Ellusive or illusion mark aguiar university of rochester and nber april 9, 2010 1 introduction qian et al. The extended dataset catalogues banking and financial crises around the entire world dating back to 1800 in some cases earlier. Despite advances in transactions technologies, paper currency still constitutes a notable percentage of the money supply in most countries.

Published in volume 26, issue 3, pages 6986 of journal of economic perspectives, summer 2012, abstract. Reinhart and rogoff 2009 use a large sample with respect to both time and number of countries included. Rogoff present a thorough historical and statistical tour of financial. Harvards rogoff shares his take on coronavirus crisis. Zombanakis professor of the international financial system at harvard kennedy school. Prior to this dataset, it was exceedingly difficult to get more than two or three decades of pub. Eidence from 100 episodes 51 we anchor our analysis of the economic cycle around financial crises on real per capita gdp for. The aftermath of financial crises american economic. Among other things, we note that policymakers should not be overly cheered by the absence of. The extended dataset catalogues banking and financial crises around the entire world dating back to.