This Time It’s Different: Eight Centuries of Financial Folly-Chapter 1
Carmen Reinhart and
Kenneth Rogoff
MPRA Paper from University Library of Munich, Germany
Abstract:
Throughout history, rich and poor countries alike have been lending, borrowing, crashing--and recovering--their way through an extraordinary range of financial crises. Each time, the experts have chimed, "this time is different"--claiming that the old rules of valuation no longer apply and that the new situation bears little similarity to past disasters. We stress that premise is wrong. Covering sixty-six countries across five continents, This Time Is Different presents a comprehensive look at the varieties of financial crises, and guides us through eight astonishing centuries of government defaults, banking panics, and inflationary spikes--from medieval currency debasements to today's subprime catastrophe. We argue that financial combustions are universal rites of passage for emerging and established market nations. The authors draw important lessons from history to show us how much--or how little--we have learned. We document that financial fallouts occur in clusters and strike with surprisingly consistent frequency, duration, and ferocity. We examine the patterns of currency crashes, high and hyperinflation, and government defaults on international and domestic debts--as well as the cycles in housing and equity prices, capital flows, unemployment, and government revenues around these crises. While countries do weather their financial storms, we show that short memories make it all too easy for crises to recur.
Keywords: banking and financial crises; currency crash; inflation; debt; default; recession (search for similar items in EconPapers)
JEL-codes: F01 F3 H6 N1 N2 (search for similar items in EconPapers)
Date: 2009
New Economics Papers: this item is included in nep-his
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Published in This Time It’s Different: Eight Centuries of Financial Folly (Princeton: Princeton University Press, 2009). (2009): pp. 3-20
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:17452
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