This Time Is Different: Eight Centuries of Financial Folly

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This Time Is Different: Eight Centuries of Financial Folly
By Carmen M. Reinhart and Kenneth S. Rogoff
Princeton University Press, 2009
496 pp. $35.00
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Reinhart and Rogoff are both academic economists with some practical experience at the U.S. Federal Reserve and the International Monetary Fund. This book, which will become a reference for years to come, assembles a data set spanning 66 countries and eight centuries, which the authors use to examine four kinds of financial crises: defaults on sovereign debt, banking crises, foreign exchange crises, and rampant inflation. Each of history's many crises is unique, of course, but the book's central message is that all of them also have remarkably similar features and aftermaths -- and therefore that there is much of contemporary relevance in seemingly dated episodes. One lesson is that as countries develop, sovereign-debt defaults become less likely but banking crises do not.