And often bank disintermediation means that you end up with the less regulated, less desirable financial institutions. The economic policy response has been massive and absolutely necessary. So I do think we are going to see more stimulus from China. If you look at U.S. unemployment claims in six weeks, we’ve had [job losses that] took 60 weeks in terms of the run-up. It’s certainly different from prior pandemics in terms of the economy, the policy response, the shutdown. An earlier version of this story gave an incorrect year in the fourth answer from Kenneth Rogoff. Carmen Reinhart (1955-) ... She authored a book named "The Economics of Industry" with her new husband Alfred Marshall, who became of the very most influential economists in history. ... Reinhart Realtors 2452 E Stadium Blvd Ann Arbor, Mi 48104 734-971-6070. And we may be at that same juncture in another couple of years where you’re looking at just staggering austerity in Spain and Italy on top of a period of staggering hardship. BM: So what does the economic recovery look like? Contact Us. But what lies at the other end? KR: We argued at the time that the right recipe was to involve writedowns of the southern European debts. (2010) "Growth in a Time of Debt." [10][15] Her work has helped to inform the understanding of financial crises in both advanced economies and emerging markets. Do you see an inflationary surge at some point? 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. And you have to deal with cash hoarding. U.S. unemployment was at its lowest level since the 1960s. They [the emerging markets] had a “good” crisis in 2008, but they’re not going to this time, regardless of how the virus hits them. The Journal of Economic Perspectives 30.1 (January 2016): 3-27. Which restaurants are going to come back? But who can they export to? From 2001 to 2003, she returned to the International Monetary Fund as deputy director at the Research Department. [1] In the 1990s, she held several positions in the International Monetary Fund. Kenneth Rogoff and Carmen Reinhart. That’s a very real possibility given past pandemics and if there’s no vaccine. But a couple of years later, the focus had moved from the banking problem to the debt problem. Subsequently, she spent several years at the International Monetary… ... which her husband… graduate teaching at FIU,[10] Reinhart in 1978 went on to attend Columbia University graduate school. CR: How much of the resilience, if not ebullience, in the market is policy driven? Can you imagine if this had hit 50 years ago? It’s going to be enormously costly. Ultimately I hope we don’t see a big change in central banks, but we’re probably going to need an expansion in finance ministries to take on and regularize and legitimize some of these responsibilities. Reinhart is ranked among the top economists worldwide, based on publications and scholarly citations. 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. Vincent’s brother lives in this area. 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. That’s not a bad prediction for China. [7][19] Rogoff and Reinhart claimed that their fundamental conclusions were accurate, despite the errors. CARMEN REINHART: My husband and I are among the lucky ones because we can work from home. China came into this with inflation running over 5% because of the huge spike in pork prices. Graciela L. Kaminsky and Carmen Reinhart. The biggest positive productivity shock we’ve had over the last 40 years has been globalization together with technology. Initially, she said, her middle-class family had felt no immediate threat from the 1959 revolution led by 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. Our son lives in this area. This page was last edited on 29 November 2020, at 04:49. Reinhart, Carmen M., and Christoph Trebesch. To feed nearly 60 million people, give them food and water and concentrate medical attention? 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. [1] After her B.A., Reinhart worked for her master's degree in Philosophy, eventually receiving this degree in 1981 from Columbia University. Reinhart met her future husband, Vincent Reinhart, when they were classmates at Columbia University in the late 1970s. That hasn’t materialized. Finance & Development, June 2013, Vol. Previously, she was the Dennis Weatherstone Senior Fellow at the Peterson Institute for International Economics. I would say, looking at it now, five years would seem like a good outcome out of this. [3] and Professor of Economics and Director of the Center for International Economics at the University of Maryland. It seems very uncertain to me. "The International Monetary Fund: 70 Years of Reinvention." So that’s a big game changer, discounting futures. 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. Nigeria, Ecuador, Colombia, Mexico—they’ve all been downgraded. It’s a very busy period even though you’re always at home. I don’t know how we’re coming back to 2019 levels [in the economy] in any near term. [18], In a normal recession such as 1991 or 2000, the Keynesian tools of tax cuts and infrastructure spending (fiscal stimulus), and lowered interest rates (monetary stimulus), will usually right the economic ship in a matter of months and lead to recovery and economic expansion. The Group of 20 has already agreed to freeze bilateral government loan repayments for low-income nations until the end of 2020. Do we see that blurring of lines with fiscal policy? You can quibble between the European style of trying to preserve firms and workers in their current jobs and the U.S. version, which is to try to address it as a natural catastrophe and try to subsidize people but allow higher unemployment. So I think the settling point for Chinese growth is going to be well below 6%. Let me just point out another issue in terms of the policy response. 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. They’re actually not that different. Her work is featured in the financial press, including The Economist,[12] Newsweek,[13] The Washington Post,[14] and The Wall Street Journal. [4], This biography of a living person is in the category. Reinhart, Carmen M., Vincent Reinhart, Christoph Trebesch. Ecuador already is in default status, as well as Argentina. CARMEN REINHART: My husband and I are among the lucky ones because we can work from home. We’re going to see a lot of risk aversion. It’s a very busy period even though you’re always at home. The monetary response has been done hand in hand with the Treasury. “The nineteenth and early twentieth centuries were filled with depressions,” write the husband-and-wife Reinharts. [16], She also has written monthly columns for international media organization Project Syndicate since 2014. A separate and previous criticism is that the negative correlation between debt and growth need not be causal. And there are many ways this feels more like the Great Depression. 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. Kennedy is executive editor for Bloomberg Economics in London. Real GDP that year grew 9%. Her work has been published in scholarly journals such as The American Economic Review, the Journal of Political Economy, the Quarterly Journal of Economics, and the Journal of Economic Perspectives. That’s where our social, political, economic system is at the moment. We came to Florida, where we’ve had a house for a decade. It has been translated to over 20 languages and won the Paul A. Samuelson Award, among others. They started their book around 2003, years before the economy began to crumble. For the G-20 initiative, I indeed hope it is the G-20 and not just the G-19. According to Research Papers in Economics (RePec). You really can’t use that experience as any template for this. 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 … I think we’re going to see a lot of work for bankruptcy lawyers going across a lot of industries. BM: And what scars are left on economies once the pandemic passes? There is no chance inflation will go up. The rest of the world is going to be in recession. CARMEN REINHART: My husband and I are among the lucky ones because we can work from home. [2] Previously, she was the Dennis Weatherstone Senior Fellow at the Peterson Institute for International Economics. In those cases, economic growth slowed for an average duration of 23 years, and The authors became the go-to experts on the history of government defaults, recessions, bank runs, currency sell-offs, and inflationary spikes. One thing that’s clear is the numbers are going to look spectacularly great in some months simply because you’re coming out from a base that was pretty devastated. I think if they can average 1% growth the next two, three years, then that will look good. In an op ed essay in Sunday’s Washington Post, Carmen Reinhart and her husband, Vincent, a former top Federal Reserve economist now at … I go back to my Wizard of Oz analogy. [1] After Reinhart passed her field examinations, she was hired as an economist by Bear Stearns and rose to the investment bank's chief economist three years later. But selling it as a free lunch, that’s stupefyingly naive. We were on track for that anyway. But I don’t think the U.S. is by any means all-in, and a lot of the contracts of the private sector are governed under U.S. law. South Africa is in terrible shape. CR: Chinese growth has always been very outward-looking, very propelled by export-led growth. She has served on the editorial boards of The American Economic Review, the Journal of International Economics, International Journal of Central Banking, among others. I’m just going to grade how you’re hiring extra workers at home.” Obviously how you’re doing on the battlefield is driving everything. My husband and I worked with Carmen to sell our condo in Saline. 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. 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. To figure out what might be next, Bloomberg Markets spoke to Reinhart, a former deputy director at the IMF who’s now a professor at the Harvard Kennedy School, and Rogoff, a former IMF chief economist who’s now a professor at Harvard. Illustrator: Marta Zafra for Bloomberg Markets. [18], By contrast, the 2008 near-meltdown destroyed parts of the financial system and left other parts reeling and in serious need of de-leveraging. I wonder if the Reinharts ever argue about economics. Vincent’s brother lives in this area. Outside of Reinhart's professional activities, she has received compensation for conference-related and speaking engagements, advisory boards, as well as writing and royalties. Clearly that has been completely replaced by a view that rates are zero now and that they’re going to stay low for a very long, long, indeterminate period of time, with a lot of liquidity support from the Federal Reserve. And yet a little more than a decade later, we’re experiencing what appears to be a one-of-a-kind crisis. James L. Rowe Jr. profiles Carmen M. Reinhart, who focuses on facts and history Had Miami Dade College offered a concentration in fashion design, Carmen Reinhart might never have become an economist. She and her husband … When Carmen Reinhart and Kenneth Rogoff published their heavyweight history of financial crises in late 2009, the title was ironic. 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. Nigeria is in terrible shape. Let’s take monetary policy before the pandemic. Obviously there are a lot of references to the influenza pandemic of 1918, which, of course, was the deadliest with estimated worldwide deaths around 50 million—maybe, by some estimates, as many as 100 million. As an analogy, the IMF or Chapter 11 bankruptcy is very good at dealing with a couple of countries or a couple of firms at a time. These are big emerging markets. BM: Does that explain the stock market surge, which seems at odds with the state of the economy? And I think that’s very wrong. BM: What about the debts in the major economies, given they have been run up so aggressively? The market sees essentially zero chance of ever having inflation again. Husband of Carmen Reinhart, who co-wrote “This Time is Different.” with Kenneth Rogoff. The article was written before Reinhart was named to her World Bank post. If you look back to 2008-09, nearly everybody had a banking crisis. CR: Some of the scars are on supply chains. KR: Of course, the “Fed lower forever” is part of it. Vincent’s brother lives in this area. Monetary policy is essentially castrated by the zero bound. Our son lives in this area. Also you probably need a debt moratorium that’s fairly widespread for emerging markets and developing economies. The professors, whose 2009 book showed that financial crises often follow similar patterns, spoke to us about what's happening in 2020. The World Trade Organization tells you trade can decline anywhere between 13% and 32%. Everything seemed to be part of a predictable pattern. 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. World Bank chief economist Carmen Reinhart. The first book is Carmen Reinhart's This Time Is Different: Eight Centuries of Financial Folly. 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. 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