November 11, 2021 — Last night, Carmen Reinhart, who is on leave from Harvard Kennedy School to serve as the World Bank’s Chief Economist, gave the Gordon Lecture in the HKS Forum. (Video here.)
I was the moderator. In preparing my questions for her, I was struck by how many memorable phrases Carmen has coined in her research career. Here is a list of five such phrases. Three of them have their own Wikipedia entries, which is remarkable. And that doesn’t even count publications of hers that also have entries.
- “This Time is Different” was, of course, the title of a best-selling book with Ken Rogoff that came out at the height of the 2007-09 recession and Global Financial Crisis. (Asset prices today are once again very high, as they were in 2007.) Reinhart and Rogoff were not the first ones to say, “this time is different.” But the widespread use of the phrase in financial market commentary subsequently is directly due to the title of their book.
- “Twin crises” was the title of a paper co-authored with Graciela Kaminsky. It refers to the phenomenon of banking crises that coincide with balance of payments crises.
- “Debt intolerance” has also earned its own Wikipedia entry. It was the title of another paper with Rogoff, which suggested that financial markets do not tolerate debt levels in Emerging Market countries that are as high as those that they accept in Advanced Economies. The two economists got even more attention from another paper in 2010, “Growth in a Time of Debt,” which famously suggested that countries with Debt/GDP levels that surpass a threshold of 90% (which the US did by a wide margin in 2020), experience slower economic growth subsequently.
- “Fear of floating,” the title of a 2002 paper with Guillermo Calvo, was a take-off on the book “Fear of Flying.” This phrase concerned exchange rate practices. EM countries couldn’t bring themselves to float their currencies freely, even those that say they float.
- “Financial repression” was a phrase originally coined in 1973, by Ron McKinnon, to describe a development strategy that developing-country governments had been attempting, which was directing banks to make cheap loans. In 2011, Reinhart and M. Belen Sbrancia “re-purposed” the phrase financial repression, to describe something that the US and other advanced countries did in the aftermath of World War II: keeping interest rates artificially low as a way to gradually work down their national Debt/GDP ratios. The suggestion is that maybe Europe and the US are doing this again in the current era.
References
Reinhart, Carmen M. and Rogoff, Kenneth S., This Time is Different: Eight Centuries of Financial Folly. Princeton University Press, 2008.
G. Kaminsky and C. Reinhart, 1999, The twin crises: the causes of banking and balance-of-payments problems,. American Economic Review, 89 (3): 473-500.
Reinhart, Carmen M.; Rogoff, Kenneth S.; Savastano, Miguel A. (2003). “Debt Intolerance”. Brookings Papers on Economic Activity. 34 (2003–1): 1–74.
Reinhart, Carmen M., and Kenneth S. Rogoff. 2010. “Growth in a Time of Debt.” American Economic Review, 100 (2): 573-78
Guillermo Calvo and Carmen Reinhart, “Fear of Floating,” QJE, 2002.
Carmen M. Reinhart and M. Belen Sbrancia, “The Liquidation of Government Debt”, IMF, 2011.