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Causes of Financial Crises Past and Present: The Role of the This Time is Different Syndrome


  • Reinhart, Carmen
  • Rogoff, Kenneth


In this note, we attempt to place the question of how we got to the global financial crisis that began as the US Subprime debacle in the summer of 2007 in the context of an international and historical comparative setting. It is of some poignancy that the “we” here refers to the wealthiest economies in the world which had, as late as 2006, been enjoying the benefits of the so-called “Great Moderation.” The “Great Moderation”, was a term used to describe (and extrapolate from) the drop in macroeconomic volatilty in the advanced economies since the late 1980s. As the business cycle had been “tamed”, financial crises of the severity and duration of what we are undergoing in the US and elsewhere in Europe were deemed improbable. At the time, a sovereign default in a eurozone country was inconceivable.

Suggested Citation

  • Reinhart, Carmen & Rogoff, Kenneth, 2012. "Causes of Financial Crises Past and Present: The Role of the This Time is Different Syndrome," MPRA Paper 51258, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:51258

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    References listed on IDEAS

    1. Carmen M. Reinhart, 2002. "Default, Currency Crises, and Sovereign Credit Ratings," World Bank Economic Review, World Bank Group, vol. 16(2), pages 151-170, August.
    2. Carmen M. Reinhart & Kenneth S. Rogoff, 2009. "Varieties of Crises and Their Dates," Introductory Chapters,in: This Time Is Different: Eight Centuries of Financial Folly Princeton University Press.
    3. Diaz-Alejandro, Carlos, 1985. "Good-bye financial repression, hello financial crash," Journal of Development Economics, Elsevier, vol. 19(1-2), pages 1-24.
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    More about this item


    financial crisis; bubbles; booms and busts; history; leverage;

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • F3 - International Economics - - International Finance
    • G01 - Financial Economics - - General - - - Financial Crises
    • N00 - Economic History - - General - - - General
    • N2 - Economic History - - Financial Markets and Institutions
    • N20 - Economic History - - Financial Markets and Institutions - - - General, International, or Comparative


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