with Yao Chen. External adjustment under the Gold Standard – a fixed exchange rate regime – was associated with few, if any, output costs. This paper evaluates how flexible prices, international migration, and monetary policy contributed to this benign adjustment experience. For this purpose, we build and estimate an open economy model for the Gold […]

Continue reading

with Oscar Jordà and Alan M. Taylor — NBER Macroeconomics Annual, Vol. 31. In advanced economies, a century-long near-stable ratio of credit to GDP gave way to rapid financialization and surging leverage in the last forty years. This “financial hockey stick” coincides with shifts in foundational macroeconomic relationships beyond the widely-noted return of macroeconomic fragility […]

Continue reading

with Manual Funke and Christoph Trebesch — European Economic Review, forthcoming. Partisan conflict and policy uncertainty are frequently invoked as factors contributing to slow post-crisis recoveries. Recent events in Europe provide ample evidence that the political aftershocks of financial crises can be severe. In this paper we study the political fall‐out from systemic financial crises […]

Continue reading

Leveraged Bubbles

with Oscar Jorda and Alan Taylor — Journal of Monetary Economics, Vol. 76, pages S1-S20. What risks do asset price bubbles pose for the economy? This paper studies bubbles in housing and equity markets in 17 countries over the past 140 years. History shows that not all bubbles are alike. Some have enormous costs for […]

Continue reading

with Thomas Steger — American Economic Review, Vol. 107, No. 2. How have house prices evolved over the long run? This paper presents annual house prices for 14 advanced economies since 1870. We show that real house prices stayed constant from the nineteenth to the mid-twentieth century, but rose strongly and with substantial cross-country variation […]

Continue reading

with Carl-Ludwig Holtfrerich, Lars P. Feld, Werner Heun, Gerhard Illing, Gebhard Kirchgässner, Jürgen Kocka, Wolfgang Streeck, Uwe Wagschal, Stefanie Walter, Carl Christian von Weizsäcker. Seit der schweren Finanz- und Wirtschaftskrise 2007/2008, der Verankerung der Schuldenbremse im Grundgesetz der Bundesrepublik Deutschland 2009 und der Schuldenkrise einiger Eurostaaten seit 2010 wird das schon lange virulente Streitthema „Staatsschulden“ […]

Continue reading

Betting the House

with Oscar Jordà and Alan M. Taylor — Journal of Economic Perspectives (forthcoming). Is there a link between loose monetary conditions, credit growth, house price booms, and financial instability? This paper analyzes the role of interest rates and credit in driving house price booms and busts with data spanning 140 years of modern economic history […]

Continue reading