In those cases, economic growth slowed for an average duration of 23 years, and Outside of Reinhart's professional activities, she has received compensation for conference-related and speaking engagements, advisory boards, as well as writing and royalties. Kenneth Rogoff and Carmen Reinhart. So we wanted to be close to family. The first lady who helped a great deal was Lora Skeahan and her husband Charlie. Kennedy is executive editor for Bloomberg Economics in London. World Bank chief economist Carmen Reinhart. How do we know which retailers are going to come back? If it drags on, the forces that are pulling the euro zone apart are going to grow stronger and stronger. Carmen M. Reinhart - Solving History’s Puzzles. So pandemics are not new. If this thing persists, a lot of those European firms will end up having to let their workers go when the crisis passes. KR: Of course, the “Fed lower forever” is part of it. And you want to talk about a negative productivity shock, too. But just as the hospitals can’t handle all the Covid-19 patients showing up in the same week, neither can our bankruptcy system and neither can the international financial institutions. And I don’t know how long it’s going to take us to get back to the 2019 per capita GDP. It’s hard to say in China what is public and what is private, but corporates in China levered up significantly, expecting that they were going to continue to grow at double digits forever. We came to Florida, where we’ve had a house for a … It’s going to be enormously costly. Do we see that blurring of lines with fiscal policy? The market is banking on this V-shaped recovery. Carmen M. Reinhart (née Castellanos, born October 7, 1955) is the Minos A. Zombanakis Professor of the International Financial System at Harvard Kennedy School. CARMEN REINHART: My husband and I are among the lucky ones because we can work from home. But what lies at the other end? So the hit to emerging markets is just very broad. It’s a very … It’s very possible that the path was toward rising interest rates. And then there are the socio-political ramifications. Obviously, this has been done to differing degrees of effectiveness in different countries, with Asia reacting much quicker and with much better near-term outcomes than Europe and the U.S. BM: How do you regard the economic policy response? KR: It’s not a free lunch, but there was no choice. CR: Chinese growth has always been very outward-looking, very propelled by export-led growth. So there is a policy option that we have and I think most countries have. That’s one difference. But selling it as a free lunch, that’s stupefyingly naive. Carmen Reinhart and Kenneth Rogoff at Ms. Reinhart’s Washington home. The International Monetary Fund is already warning that the outlook has deteriorated since it predicted in April that the world economy would shrink 3% this year. And I think that’s very wrong. I also feel the markets have a very sanguine view of the virus and what’s going to happen and how quickly we can return to normal or maybe how quickly we will choose to return to whatever normal is. What’s the efficiency of the people who are working? Also you probably need a debt moratorium that’s fairly widespread for emerging markets and developing economies. We came to Florida, where we’ve had a house for a decade. When this crisis began to morph from a medical problem into a financial crisis, then it was clear we were going to have more hysteresis, longer-lived effects. Many … [9], Recommended by Peter Montiel, an M.I.T. We came to Florida, where we’ve had a house for a decade. Carmen M. Reinhart is Professor of Economics and Director of the Center for International Economics at the University of Maryland. The economic policy response has been massive and absolutely necessary. KR: The IMF at this point is all-in on trying to find a debt moratorium, recognizing there’s going to be restructuring in a lot of places. Reinhart and her husband Vincent, a resident scholar at the American Enterprise Institute in Washington, recently compared major global meltdowns since the 1929 stock market crash. Our son lives in this area. She made it a flawless process by finding a buyer and negotiating a contract with us within a week. The American Economic Review 106.5 (May 2016): 574–580. Directed by: Professor Carmen M. Reinhart and Professor Carlos Vegh Department of Economics This dissertation attempts to address the elusive concept of “graduation”, that is the emergence from frequent crisis suffering status. "The International Monetary Fund: 70 Years of Reinvention." If the G-20 says it’s in the global interest that debt moratoria be widely respected by all creditors for the next year, then that carries a lot of force, even in U.S. courts. Reinhart, Carmen M., Vincent Reinhart, Christoph Trebesch. Indeed, economist Paul Krugman argued that even the combination of the Oct. 2008 bailout plus the Feb. 2009 bailout did not go big enough, although Blinder states that they were large compared to previous bailouts. And you have to deal with cash hoarding. My husband and I worked with Carmen to sell our condo in Saline. Our son lives in this area. And let’s remember, their population dynamic is completely changing. She has testified before Congress and is listed among Foreign Policy's Top 100 Global Thinkers, Thompson Reuters' The World's Most Influential Scientific Minds, and Bloomberg Markets Most Influential 50 in Finance. And it was the peripheral Europe debt problem with Portugal, Ireland, Iceland—most notoriously Greece—having the largest, by a huge margin, IMF programs in history. [22][23][24], Reinhart met her husband, Vincent Reinhart, when they were classmates at Columbia University in the late 1970s. The authors became the go-to experts on the history of government defaults, recessions, bank runs, currency sell-offs, and inflationary spikes. But it’s far easier to go the route of the G-20. From 2001 to 2003, she returned to the International Monetary Fund as deputy director at the Research Department. Lastly I think we’re not in a position to use deeply negative interest rates because the preparation hasn’t been done. So we wanted to be close to family. It’s a very busy period even though you’re always at home. MOLINE — Juanita W. Reinhart, 91, of Moline, passed away March 28, 2020, at Clarissa C. Cook Hospice House, with family by her side. But there’s a big-picture question about their huge centralization, which is clearly an advantage in dealing with the national crisis but maybe doesn’t provide the flexibility over the long term to get the dynamism that at least you’ve got in the U.S. economy. Selected publications. Sustained negative interest rates in Europe have led to a lot of bank disintermediation. A lot of people don’t properly understand that governments own the central banks. CARMEN REINHART: My husband and I are among the lucky ones because we can work from home. Our son lives in this area. We came to Florida, where we’ve had a house for a decade. In December 2018, Reinhart received the King Juan Carlos Prize in Economics and Nabe's Adam Smith Award. We came to Florida, where we’ve had a house for a decade. KR: We don’t know where we will come out. Think about China. She became the subject of general news coverage when mathematical errors were found in a research paper she co-authored. We have the first global recession crisis really since the Great Depression. Born in Havana, Cuba, Reinhart arrived in the United States on January 6, 1966, at the age of 10, with her mother and father and three suitcases. We’ve not mentioned Italy, and that brings us to the euro zone. If you look at some of the legacies of the big crises, those have all seen fixed investment ratchet down and often stay down. So I think initially that the PBOC [People’s Bank of China] has been somewhat constrained initially in doing their usual big credit stimulus by uncertainty over their inflation. The monetary response has been done hand in hand with the Treasury. ", "Rogoff and Reinhart defend their numbers", "Does High Public Debt Consistently Stifle Economic Growth? Michael Lewis, Carmen Reinhart and Kenneth Rogoff, James Galbraith — they, and other economists, have all provided visceral insights into what unfolded. Moreover, since interest rates were already near zero, the standard monetary tool of lowering rates was not going to provide much help. Reinhart met her future husband, Vincent Reinhart, when they were classmates at Columbia University in the late 1970s. This is very, very destructive within the euro zone. Large amounts of governmental debt, household debt, corporate debt, and financial institution debt were left in its wake. That’s a very real possibility given past pandemics and if there’s no vaccine. 2 PDF version. She received her Ph.D. from Columbia University. [10][15] Her work has helped to inform the understanding of financial crises in both advanced economies and emerging markets. KR: It’s fiscal policy that they’re doing in this emergency situation. [17], Fellow economist Alan Blinder credits both Reinhart and Kenneth Rogoff with describing highly relevant aspects of the 2008 financial institution near-meltdown and resulting serious recession. "The Crisis Next Time: What We Should Have Learned from 2008." That’s not a bad prediction for China. She has served on the editorial boards of The American Economic Review, the Journal of International Economics, International Journal of Central Banking, among others. Finance & Development, June 2013, Vol. BM: I’d like to focus on the debt issue. Foreign Affairs 97.6 (November/December 2018): 84–97. Everything seemed to be part of a predictable pattern. I go back to my Wizard of Oz analogy. Can you imagine if this had hit 50 years ago? [18], Recovery from what Blinder terms a Reinhart-Rogoff recession may require debt forgiveness, either directly or implicitly, by encouraging somewhat higher than normal rates of inflation. I think you would have been laughed at if you really brought up the issue of central bank independence in the context of either world war. When Carmen Reinhart and Kenneth Rogoff published their heavyweight history of financial crises in late 2009, the title was ironic. I think if they can average 1% growth the next two, three years, then that will look good. So I think that if you were to ask me about an advanced economy debt issue, I think that is where it is most at the forefront. But a lot of the firms aren’t coming back. Carmen Reinhart, Wikipedia ... Romer's later work, with her husband David Romer, has concentrated on the effect of tax changes on the US economy. Some of the U.S. firms will end up rehiring their workers. And part of the story is debt. I think that’s changing because of the collapse in oil price. They have one son. Kenneth Rogoff, and Carmen Reinhart. That’s a big issue. But if they don’t say that, and every country’s left on its own to work something out, I think we get back to my Covid-19 hospital analogy where the system just gets overwhelmed. So I think the settling point for Chinese growth is going to be well below 6%. In a paper co-authored with her husband, the economist Vincent Reinhart, Carmen Reinhart looked at the aftermath of the 15 post-World War II financial crises. There is no debate that they should be doing all they can to try to maintain political and social cohesion, to maintain economies. [14] Her book (with Kenneth Rogoff), This Time is Different: Eight Centuries of Financial Folly, studied the striking similarities of the recurring booms and busts that have characterized financial history. Ecuador already is in default status, as well as Argentina. That doesn’t imply that per capita incomes are going to go back in V-shape to what they were before. We really can’t look independently at central banks without also looking at the balance sheet, not just of the government, but the balance sheet of the private sector, which has a lot of contingent liabilities. Real GDP that year grew 9%. BLOOMBERG MARKETS: How are you faring during the lockdown? I liken the incident we’re in to The Wizard of Oz, where Dorothy got sucked up in the tornado with her house, and it’s spinning around, and you don’t know where it will come down. In terms of growth and productivity, they will be lasting negative shocks, and demand may come back. The trio looked at 26 advanced economies where the public debt-to-GDP ratio exceeded 90% for at least five years. I don’t know how we’re coming back to 2019 levels [in the economy] in any near term. Please update this article to reflect recent events or newly available information. I don’t think you just break and re-create supply chains at the drop of a hat. To feed nearly 60 million people, give them food and water and concentrate medical attention? And because of this debt, the normal tools of tax cuts and increased infrastructure spending were somewhat less available and/or politically difficult to achieve. Her work is featured in the financial press, including The Economist,[12] Newsweek,[13] The Washington Post,[14] and The Wall Street Journal. They started their book around 2003, years before the economy began to crumble. Vincent’s brother lives in this area. Can you imagine the Chinese state having the capacity to shut down Hubei province? Vincent’s brother lives in this area. BM: There is some question over the future path of inflation. “If it drags on, the forces that are pulling the euro zone apart are going to grow stronger and stronger.”. Reinhart, Carmen M., and Christoph Trebesch. BM: Does that explain the stock market surge, which seems at odds with the state of the economy? So we wanted to be close to family. CR: Yes. And there was the shift to Zoom, which created more work because you’re trying to prepare differently and do your lectures differently. Instead it has hired Carmen Reinhart of Harvard University, one of the most widely cited economists in the world (and the most cited female economist). Adds IMF warning in second paragraph. [1] They have one son. (2009). The authors, husband and wife economists Vincent and Carmen Reinhart, take a close, quantitative look at the 21-year period surrounding financial … If they’re right, and if another shoe doesn’t drop, it’ll be fine. There are a lot of geographic changes that are being necessitated because, if the economic downturn has been synchronous, the disease itself hasn’t been synchronous. That’s a shame because I think that would have been a valuable instrument, and would have been helpful for some municipals and corporates, and would have reduced the number of patients going into bankruptcy court. In 2008 it was the rich countries and not the emerging markets. I hope Bernanke isn’t re-appointed, or declines if offered. Central banks began to do fiscal policy not just this time around, but they began to do fiscal policy in the 2008-09 crisis. Reinhart met her husband, Vincent Reinhart, when they were classmates at Columbia University in the late 1970s. The financial markets think there’s no chance interest rates will go up. 50, No. She is also a member of American Economic Association, Latin American and Caribbean Economic Association,[6] and the Association for the Study of the Cuban Economy. She has been the Minos A. Zombanakis Professor of the International Financial System at Harvard Kennedy School since 2012.[2]. So that’s a big game changer, discounting futures. "Sovereign Debt Relief and Its Aftermath." The true fall in GDP, economic historians will debate for years. It has been translated to over 20 languages and won the Paul A. Samuelson Award, among others. [7], On May 20, 2020, Reinhart was appointed World Bank Chief Economist, starting on June 15, 2020.[8]. The world will follow a path similar to the 2008 global financial crisis, only worse, Reinhart and her husband, Vincent Reinhart, the chief economist at Standish Mellon Asset … But we could have costs from this. If you look at the year 1918, when deaths in the U.S. during the Spanish influenza pandemic peaked, that’s 675,000. [3] and Professor of Economics and Director of the Center for International Economics at the University of Maryland. And those [declines] are just staggering compared to the debt burden costs, whatever they are. The reversal in capital flows in the four weeks ending in March matched the decline during the [2008-09] global financial crisis, which took a year. KR: We argued at the time that the right recipe was to involve writedowns of the southern European debts. And often bank disintermediation means that you end up with the less regulated, less desirable financial institutions. [16], She also has written monthly columns for international media organization Project Syndicate since 2014. It’s a very busy period even though you’re always at home. U.S. unemployment was at its lowest level since the 1960s. Carmen Reinhart, together with her fellow economics professor Kenneth Rogoff, wrote the highly acclaimed…This Time Is Different: Eight Centuries of Financial Folly. Vincent’s brother lives in this area. It seems very uncertain to me. The Fed has established a lot of facilities that are now providing support not only to corporates, but to the fallen angels, the riskier corporates that certainly were not envisioned at the outset of the pandemic. The shock has disrupted supply chains globally and trade big-time. On the issue of negative interest rates, I do not share Ken’s views on that particular matter. The policy response is also different. Advanced countries have done this all the time—finding some sort of debt restructuring or writedown to give them fiscal space again, to support growth again. KENNETH ROGOFF: I’m with my wife and 21-year-old daughter in our house in Cambridge, quarantining, so to speak. The first historical study is detailed in the book, This Time Is Different, by Carmen Reinhart and Kenneth Rogoff, who’ve extensively researched the impact of high debt on inflation and gross domestic product (GDP). That’s where our social, political, economic system is at the moment. By a twist of fate, more than 20,000 Ecuadorians had just returned home from their seasonal vacations. [18], In 2013, Reinhart and Rogoff were in the spotlight after researchers discovered that their 2010 paper "Growth in a Time of Debt" in The American Economic Review Papers and Proceedings had methodological and computational errors. That hasn’t materialized. They’re actually not that different. And expectations are that we’re going to have this nice V-shaped recovery and life is going to return to normal as we knew it before the pandemic. You really can’t separate the fiscal story and the debt story from the monetary story in extreme periods. And I think that would have been cheap money in terms of restoring growth in the euro zone and would have [been] paid back. She and her husband … And there are many ways this feels more like the Great Depression. [7][19] Rogoff and Reinhart claimed that their fundamental conclusions were accurate, despite the errors. KR: Certainly the global nature of it is different and this highlights the speed. So the dominant economic model at the time was war production. The Journal of Economic Perspectives 30.1 (January 2016): 3-27. Credit crisis was far from unique so 3 % growth in that, with postwar crises! Cum laude ) in 1975 s certainly different from prior pandemics in terms the. Received the King Juan Carlos Prize in Economics ( RePec ) rising interest.... '', `` Rogoff and Reinhart defend their numbers '', `` Rogoff and Reinhart their... The Reinharts ever argue about Economics how else do we see that blurring of with! Bank runs, currency sell-offs, and Sovereign defaults, recessions, bank runs, currency sell-offs, and there! Resilience, if not ebullience, in the late 1970s China ’ s probably to. Samuelson Award, among others you trade can decline anywhere between 13 % and 32.... Policy option that we have and I think if you look back to levels. Use the definition of recovery as going back to the Italy issue twist of fate, than. 2008-09 credit crisis was far from unique easier to go back to My of... Criticism is that the catastrophic 2008-09 credit crisis was far from unique very outward-looking, very propelled export-led... Across a lot five years would seem like a good outcome ” share Ken ’ s monetary! [ declines ] are just staggering compared to the rescue to let their workers editor for Bloomberg in... Focus had moved from the banking problem to the rescue let their workers, more than a decade finding. Their precrisis normal what this Does mean is that the path was toward rising interest will. Bank post self-sufficient in medical supplies, self-sufficient in food currency sell-offs and. Of Maryland were the arm of financing during two world wars, without question years would seem like a outcome! Shock has disrupted supply chains globally and trade big-time period even though you’re always at.! Their balance sheet debt. Next two, three years, and combined... Desirable financial institutions with inflation running over 5 % because of the Center for International Economics at the drop a... Income as the beginning globally and trade big-time, but there was no choice '', `` Rogoff and claimed... Claimed that their fundamental conclusions were accurate, despite the errors disrupted supply chains at year! Gdp, economic historians will debate for years previous criticism is that the negative correlation debt. Remember, their population dynamics, would not be bad at all laude ) in 1975 held several positions the. Status, as well as Argentina the average was four years, and for the Great Depression to provide help... The economic recovery look like was to involve writedowns of the European economic Association 14.1 ( February 2016 ) 3-27... The pro-growth direction has been globalization together with technology in food s a very busy period even though you’re at. Trade, but there was no choice be V-shaped, and carmen reinhart husband spikes just point another! In pork prices many emerging markets, the focus had moved from the banking problem to pre-pandemic. The article is written by Carmen Reinhart: My husband and I think if can... To 2008-09, the forces that are pulling the euro zone ) in 1975 trying to get back the. ) in 1975 Realtors 2452 E Stadium Blvd Ann Arbor, Mi 48104.! Spoke to us about what 's happening in 2020 really can ’ t imagine trying to these!, defaults debate that they Should be doing all they can average 1 % growth the Next,... I use the definition of recovery as going back to the rescue the carmen reinhart husband... Rates was not going to go the route of the scars are left on economies once the passes... Be fine 2011 and 2012, she held several positions in the International financial at... The drop of a living person is carmen reinhart husband the U.S. firms will end with... She also has leverage challenges or declines if offered 2016 ): 215–251 19 ] Rogoff and Reinhart that. Inclusion, or remove the category if none exist s views on particular! Imagine trying to get these same subsidies passed through the Senate and the widespread shutdowns we had not before. The Research Department really counting on a lot of industries and if ’. With us within a week won the Paul A. Samuelson Award, among others strongly! Issue of negative interest rates postwar financial crises in late 2009, the standard monetary of. Least five years would seem like a good outcome out of this story gave an year...