This Time is Different: A Panoramic View of Eight Centuries of Financial Crises

Carmen Reinhart and Kenneth Rogoff

No 595, CEMA Working Papers from China Economics and Management Academy, Central University of Finance and Economics

Abstract: This paper offers a "panoramic" analysis of the history of financial crises dating from England's fourteenth-century default to the current United States sub-prime financial crisis. Our study is based on a new dataset that spans all regions. It incorporates a number of important credit episodes seldom covered in the literature, including for example, defaults and restructurings in India and China. As the first paper employing this data, our aim is to illustrate some of the broad insights that can be gleaned from such a sweeping historical database. We find that serial default is a nearly universal phenomenon as countries struggle to transform themselves from emerging markets to advanced economies. Major default episodes are typically spaced some years (or decades) apart, creating an illusion that "this time is different" among policymakers and investors. A recent example of the "this time is different" syndrome is the false belief that domestic debt is a novel feature of the modern financial landscape. We also confirm that crises frequently emanate from the financial centers with transmission through interest rate shocks and commodity price collapses. Thus, the recent US sub-prime financial crisis is hardly unique. Our data also documents other crises that often accompany default: including inflation, exchange rate crashes, banking crises, and currency debasements.

JEL-codes: E6 F3 N0 (search for similar items in EconPapers)
Pages: 123 pages
Date: 2008-03
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (389)

Published in Annals of Economics and Finance, Nov 2014, pages 1065-1188

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Related works:
Journal Article: This Time is Different: A Panoramic View of Eight Centuries of Financial Crises (2014)
Journal Article: "This time is different": panorama of eight centuries of financial crises (2009)
Working Paper: This Time is Different: A Panoramic View of Eight Centuries of Financial Crises (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:cuf:wpaper:595

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