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. So the causality problem has been well known for some time. Ghosh january 2015 abstract high public debt often produces the drama of default and restructuring. Despite advances in transactions technologies, paper currency still constitutes a notable percentage of the money supply in most countries.
Among other things, we note that policymakers should not be overly cheered by the absence of. Reinhartrogoff response to critique real time economics. Reinhart and rogoff divide their work into discussions of sovereign defaults, both domestic and foreign. 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. A new paper, by university of massachusetts amherst economics doctoral student thomas herndon and professors michael ash and robert pollin, says harvard university scholars carmen reinhart and. The ones marked may be different from the article in the profile. Belen sbrancia authorized for distribution by atish r. We would like to thank michael bordo, josefin meyer, maurice obstfeld, vincent reinhart, and ken rogoff, the editor, two anonymous referees, and seminar participants at columbia university, harvard university, the international monetary fund, and the university of melbourne for helpful comments and suggestions. Thanks to the data, reinhart and rogoff were able to predict that the recovery of the us economy from the recent. The aftermath of financial crises american economic.
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. When a reader finishes this work, he or she will not be surprised to learn that the greeceeuropean union sovereign default issues of 2010 were preceded by greece being in default for 100 of the past. Each time, the experts have chimed, this time is differentclaiming that the old rules of valuation no longer apply and that the new situation bears little similarity to past disasters. Rogoff present a thorough historical and statistical tour of financial. The misreading of reinhart and rogoff advisor perspectives. Despite common but irregular instances of financial crises, the general tendency has been to examine these as episodic events of financial disruptions so that there has not emerged a. This cited by count includes citations to the following articles in scholar. Paul krugman kindly referred to our results in his blog saying john irons and josh bivens have the best takedown yet of the reinhart rogoff paper pdf claiming that debt over 90 percent of gdp leads to drastically slower growth. On average, public debt rose by more than 80 percent within three years after a. Data on outstanding debt owed to china by country, 20002017 here. The book is a must read for anyone interested in economics and finance.
The misreading of reinhart and rogoff by robert huebscher january 10, 2012 if the rallying cry for deficit reduction rests on an intellectual framework, it would be the work of carmen reinhart and ken rogoff, whose book, this time is different, has been hailed for its exhaustive historical study of financial crises. Access a free summary of this time is different, by carmen m. On point with tom ashbrook thursday, november 15, 2007 show titled wheres the economy headed. This is the rst formal application of the core dataset described in reinhart and rogoff 2009a, and the scope. Debt and growth in a time of controversy the heritage.
Previously, she was the dennis weatherstone senior fellow at the peterson institute for international economics. Sovereign debt relief and its aftermath reinhart 2016. Figure 3 from growth in a time of debt semantic scholar. Use features like bookmarks, note taking and highlighting while reading this time is different. The curse of cash isbn 97806911722 pdf epub kenneth s. Nber working paper series debt intolerance kenneth. For example, it constitutes roughly 10% of the us federal reserves main monetary aggregate, m2. The share of countries linking their currency to the dollar in some manner has been stable since 1995, and this group repre. From the new york times bestselling author of this time is different, a fascinating and important book ben bernanke about phasing out most paper money to fight crime and tax evasionand to battle financial crises by tapping the power of negative interest rates. Reinhart, and christoph trebesch, sovereign bonds since waterloo.
Eight centuries of financial folly, was a surprise best seller, but it. Rogoff and 20,000 other business, leadership and nonfiction books on getabstract. Proudly built by ai2 with the help of our collaborators using these sources. Reinhart and rogoff 2004, which classified exchange rate arrangements for. Reinhart and rogoff s work showed average real economic growth slows a 0.
Rogoff authorized for distribution by stijn claessens december 20 abstract even after one of the most severe multiyear crises on record in the advanced. This time is different is a thorough description of various financial crisis that have occurred during the last eight centuries. As soon as the paper was released, many economists pointed out that a. Financial and sovereign debt crises international monetary fund. Eight centuries of financial folly kindle edition by reinhart, carmen m. Rogoff that the united states and europe face extremely difficult challenges in trying to recover from the 20078. Rogoff throughout history, rich and poor countries alike have been lending, borrowing, crashing, and recovering their way through an extraordinary range of financial crises. On average, public debt rose by more than 80 percent within three years after a crisis. Blog posts, news articles and tweet counts and ids sourced by. The role of the thistimeisdifferent syndrome carmen m.
Politicians, commentators, and activists widely cited the paper in political debates over the effectiveness of austerity in fiscal policy for debtburdened. For the truth is that reinhart rogoff faced substantial criticism from the start, and the controversy grew over time. Find, read and cite all the research you need on researchgate. From financial crash to debt crisis scholars at harvard. A new paper by thomas herndon, michael ash and robert pollin calls into question research on public debt and its effects on growth by harvard university economists carmen reinhart and kenneth rogoff. A global database on financial crises with a longterm view. Reinhart and kenneth rogoff s 2009 book, this time is different. Section ii summarizes highlights from a first view of the extended dataset, with special reference to the current conjuncture. According to the reinhart and rogoff categorizations table 1, seven countries currently are dollarized or have currency boards using the dollar and eightynine have a pegged exchange rate against the dollar. With this breakthrough study, leading economists carmen reinhart and kenneth rogoff definitively prove them wrong. An interview with kenneth rogoff at the wayback machine archived april 8, 2011, nicholas rugoff, the. The world is drowning in cashand its making us poorer and less safe.
Nber working paper series debt intolerance kenneth s. If you use all of the right numbers, it turns out growth does slow when debt is high, but not nearly as much as reinhart and rogoff hereafter, rr claimed. Works by or about kenneth rogoff in libraries worldcat catalog kenneth rogoff player profile and games at. The reinhartrogoff error or how not to excel at economics. But debt is also reduced through financial repression, a tax on bondholders and savers via negative or below. This time is different eight centuries of financial folly carmen m. The imf 2004 paper was prescient in calling the housing bubbles in the spain and ireland. Tobias straumann recommends this time is different. Carmen reinhart and kenneth rogoff, leading economists whose work has been influential in. All content included on our site, such as text, images, digital downloads and other, is the property of its content suppliers and protected by us and international laws. Carmen reinhart and kenneth rogoff s wideranging, quantitative study of.
1345 990 1580 1582 318 101 339 927 424 504 1567 270 706 724 720 209 1118 1445 1001 1009 650 1118 87 1403 1454 1346 1048 1411 747 1616 1050 1213 465 355 1324 771 1298 1020 1014 1233 428 1002 1355 178 213