TY  - JOUR
AU  - Reinhart,Carmen M.
AU  - Rogoff,Kenneth S.
TI  - Is the 2007 U.S. Sub-Prime Financial Crisis So Different?  An International Historical Comparison  
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 13761
PY  - 2008
Y2  - January 2008
UR  - http://www.nber.org/papers/w13761
L1  - http://www.nber.org/papers/w13761.pdf
N1  - Author contact info:
Carmen M. Reinhart
University of Maryland
School of Public Policy
and Department of Economics
4105 Van Munching Hall
College Park, MD 20742
Tel: 301/405-7006
Fax: 301/403-8107
E-Mail: creinhar@umd.edu

Kenneth S. Rogoff
Thomas D Cabot Professor of Public Policy
Economics Department
Harvard University
Littauer Center 232
Cambridge, MA 02138-3001
Tel: 617-495-4022
Fax: 617/495-7730
E-Mail: krogoff@harvard.edu
AB  - 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.
ER  -