Saturday, January 17, 2009

Kenneth Rogoff = Great Reading

I highly recommend "The Aftermath of Financial Crises," a presentation paper by Ken Rogoff and Carmen Reinhart. It graphically (ie: with graphs) compares countries' similar downturns in employment, GDP, and equities, as well as the rise in public debt in the aftermath of financial crises.

Rogoff and Reinhart are set to publish a book shortly about the history of financial crises over the last 800 years. I'm particularly interested in the similarities in the run-ups to the crisis. Rogoff mentions a few of those in an interview in the Minneapolis Fed's quarterly publication that is very interesting. But I always try to read everything he puts out there.

I should note that Rogoff says in the interview that the U.S. will have no problem absorbing $1-$2 trillion in extra debt (this was when TARP was just getting passed) so long as the economy grows faster than government does. However, he mentions that he fears the regulatory backlash will hamper economic growth for many years to come.

No comments: