This Time is Different: A Panoramic View of Eight Centuries of Financial Crises

The prior post was just a teaser, here’s an excellent condensed version of the book:”This time Is Different 8 Centuries Of Financial Folly”. Hope this saves you some money. Enjoy!

Click Here To Read A Panoramic View of ” This time Is Different 8 Centuries of Financial Folly”

Abstract (via Harvard)

This paper offers a “panoramic” analysis of the history of financial crises dating from England’s fourteenth-century default to the current United States sub-prime financial crisis. Our study is based on a new dataset that spans all regions. It incorporates important credit episodes seldom covered in the literature, including for example, defaults in India and China. As the first paper employing this data, our aim is to illustrate broad insights that can be gleaned from a sweeping historical database. We find that serial default is a nearly universal phenomenon as countries struggle to transform themselves from emerging markets to advanced economies. Major default episodes are typically spaced some years (or decades) apart, creating an illusion that “this time is different” among policymakers and investors. We also confirm that crises frequently emanate from the financial centers with transmission through interest rate shocks and commodity price collapses. Thus, the recent US sub-prime financial crisis is hardly unique. Our data also documents other crises that often accompany default: inflation, exchange rate crashes, banking crises, and currency debasements.

Excerpt (via Harvard)

The economics profession has an unfortunate tendency to view recent experience in the narrow window provided by standard datasets. That is why Friedman and Schwartz’s monumental monetary history of the United States still resonates almost one-half century after publication (Friedman and Schwartz, 1963). With a few notable exceptions, crosscountry empirical studies on financial crises typically begin in 1980 and are limited in several other important respects. 1. Yet an event that is rare in a three decade span may not be all that rare when placed in a broader context.

Click Here To Read A Panoramic View of ” This time Is Different 8 Centuries of Financial Folly”