This Time It’s Different: Eight Centuries of Financial Folly-Chapter 1
AbstractThroughout 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.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 17452.
Date of creation: 2009
Date of revision:
banking and financial crises; currency crash; inflation; debt; default; recession;
Find related papers by JEL classification:
- N1 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations
- F3 - International Economics - - International Finance
- F01 - International Economics - - General - - - Global Outlook
- N2 - Economic History - - Financial Markets and Institutions
- H6 - Public Economics - - National Budget, Deficit, and Debt
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