“Is the US sub-prime financial crisis so different?”
Reinhart & Rogoff (2008), “Is the 2007 U.S. Sub-Prime Financial Crisis So Different? An International Historical Comparison“. AER.
Empirical paper that seeks to put the financial crisis in some kind of international historical context. The authors construct a dataset of post-war “rich country” bank-centred crises for the purposes of comparison with the current crisis, consisting of Spain (1977), Norway (1987), Finland (1991), Sweden (1991) and Japan (1992), plus 13 other episodes of lesser severity. From there, they examine asset prices, real economic growth, and public debt. They find that the US exhibits striking similarities to the archetypal case with respect to house and real equity prices–if anything, it is even worse than the baseline average from the “big five” listed crises. The US current account deficit exceeds the typical deficit by some margin. At the time the paper was written, the shock to US real GDP, however, was not as severe as the “big five” average; neither was the growth of its public debt.