Σάββατο 4 Ιανουαρίου 2014

Bloomberg: Reinhart-Rogoff Find Hangovers in Bank Crises: Cutting Research


3/4/2014

It takes eight years on average for economies to regain the level of income lost in a banking crisis, and the U.S. and Germany are alone among 12 in having already done so since the 2008 turmoil, according to Harvard University professors Carmen Reinhart and Kenneth Rogoff.

Their study of 100 banking crises over two centuries, scheduled to be presented today at the conference of the American Economic Association in Philadelphia, found part of the costs of banking difficulties relate to how long it takes economies to recover.

Of the 12 economies examined since 2008, the per-capita gross domestic product of Greece, Italy, Netherlands, Portugal and Spain kept contracting through 2013, according to a draft of the paper. Other than the U.S. or Germany, the rest either didn’t grow or didn’t grow enough to attain their previous income peaks.

In 43 percent of the historical cases studied, economies double-dipped back into recession. The paper covered 63 crises in advanced economies and 37 in larger emerging markets.

“Speeding up recovery may require that advanced economy governments adopt some of the approaches that have been relegated to the emerging markets over the last few decades,” said Reinhart and Rogoff, who authored “This Time is Different: Eight Centuries of Financial Folly.”

                           Harvard University Professor Kenneth Rogoff.

Such policies include restructuring debt, allowing faster inflation and introducing capital controls.

“Delays in accepting that desperate times call for desperate measures keeps raising the odds that, as documented here, this crisis may in the end surpass in severity the depression of the 1930s in a large number of countries,” the economists said.

The European Central Bank’s loose monetary policy is preventing the economy from stumbling into a 1930s-like circle of falling prices and contraction, according to a research note by Germany’s Bundesbank.

                            Harvard University Professor Carmen Reinhart.

Deflationary pressures in the 1930s were caused by a sustained shrinkage of the economy, the Frankfurt-based central bank wrote. This caused consumers to expect falling prices over a longer period of time and prompted them to delay purchases, further harming already-contracting output.

“Today’s situation can hardly be compared with the one from the past because monetary policy is very expansive and thwarts the contraction,” the Bundesbank said. Prices and wages are falling in countries like Ireland and Greece not because of a deflationary spiral but because they were too high before the crisis, it argued in the note published on Dec. 19.

“Against this background, deflationary risks will remain very low,” the Bundesbank said.

Πηγή

Δεν υπάρχουν σχόλια:

Δημοσίευση σχολίου