Abstract

https://ssrn.com/abstract=1088675
 
 

References (7)



 
 

Citations (71)



 


 



Is the 2007 U.S. Sub-Prime Financial Crisis so Different? an International Historical Comparison


Carmen M. Reinhart


Peter G. Peterson Institute for International Economics; National Bureau of Economic Research (NBER)

Kenneth Rogoff


Harvard University - Department of Economics; National Bureau of Economic Research (NBER)

January 2008

NBER Working Paper No. w13761

Abstract:     
Is the 2007-2008 U.S. sub-prime mortgage financial crisis truly a new and different phenomena? Our examination of the longer historical record finds stunning qualitative and quantitative parallels to 18 earlier post-war banking crises in industrialized countries. Specifically, the run-up in U.S. equity and housing prices (which, for countries experiencing large capital inflows, stands out as the best leading indicator in the financial crisis literature) closely tracks the average of the earlier crises. Another important parallel is the inverted v-shape curve for output growth the U.S. experienced as its economy slowed in the eve of the crisis. Among other indicators, the run-up in U.S. public debt and is actually somewhat below the average of other episodes, and its pre-crisis inflation level is also lower. On the other hand, the United States current account deficit trajectory is worse than average. A critical question is whether the U.S. crisis will prove similar to the most severe industrialized-country crises, in which case growth may fall significantly below trend for an extended period. Or will it prove like one of the milder episodes, where the recovery is relatively fast? Much will depend on how large the shock to the financial system proves to be and, to a lesser extent, on the efficacy of the subsequent policy response.

Number of Pages in PDF File: 15


Open PDF in Browser Download This Paper

Date posted: January 30, 2008  

Suggested Citation

Reinhart, Carmen M. and Rogoff, Kenneth, Is the 2007 U.S. Sub-Prime Financial Crisis so Different? an International Historical Comparison (January 2008). NBER Working Paper No. w13761. Available at SSRN: https://ssrn.com/abstract=1088675

Contact Information

Carmen M. Reinhart (Contact Author)
Peter G. Peterson Institute for International Economics ( email )
1750 Massachusetts Avenue, NW
Washington, DC 20036
United States
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Kenneth S. Rogoff
Harvard University - Department of Economics ( email )
Littauer Center
Room 232
Cambridge, MA 02138
United States
617-495-4022 (Phone)
617-495-7730 (Fax)
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Feedback to SSRN


Paper statistics
Abstract Views: 10,275
Downloads: 999
Download Rank: 16,253
References:  7
Citations:  71